Correlation Between UNITED UTILITIES and Socit Gnrale

Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and Socit Gnrale at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining UNITED UTILITIES and Socit Gnrale into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNITED UTILITIES GR and Socit Gnrale Socit, you can compare the effects of market volatilities on UNITED UTILITIES and Socit Gnrale and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in UNITED UTILITIES with a short position of Socit Gnrale. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Socit Gnrale.

Diversification Opportunities for UNITED UTILITIES and Socit Gnrale

0.43

Correlation Coefficient

UNITED UTILITIES  Socit Gnrale

Very weak diversification

The 3 months correlation between UNITED and Socit is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit and UNITED UTILITIES is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on UNITED UTILITIES GR are associated (or correlated) with Socit Gnrale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Socit Gnrale go up and down completely randomly.

Pair Corralation between UNITED UTILITIES and Socit Gnrale

Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the Socit Gnrale. But the stock apears to be less risky and, when comparing its historical volatility, UNITED UTILITIES GR is 1.52 times less risky than Socit Gnrale. The stock trades about -0.18 of its potential returns per unit of risk. The Socit Gnrale Socit is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,661  in Socit Gnrale Socit on September 22, 2024 and sell it today you would earn a total of  8.00  from holding Socit Gnrale Socit or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

UNITED UTILITIES GR  vs.  Socit Gnrale Socit

UNITED UTILITIES

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED UTILITIES GR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UNITED UTILITIES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Socit Gnrale Socit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Socit Gnrale Socit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Socit Gnrale unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITED UTILITIES and Socit Gnrale

The main advantage of trading using opposite UNITED UTILITIES and Socit Gnrale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Socit Gnrale can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Socit Gnrale will offset losses from the drop in Socit Gnrale's long position.

The idea behind UNITED UTILITIES GR and Socit Gnrale Socit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..