Correlation Between United Utilities and Tigo Energy
Can any of the company-specific risk be diversified away by investing in both United Utilities and Tigo Energy 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 Tigo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and Tigo Energy, you can compare the effects of market volatilities on United Utilities and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Tigo Energy.
Diversification Opportunities for United Utilities and Tigo Energy
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Tigo is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Group are associated (or correlated) with Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of United Utilities i.e., United Utilities and Tigo Energy go up and down completely randomly.
Pair Corralation between United Utilities and Tigo Energy
Assuming the 90 days horizon United Utilities Group is expected to generate 0.19 times more return on investment than Tigo Energy. However, United Utilities Group is 5.34 times less risky than Tigo Energy. It trades about 0.07 of its potential returns per unit of risk. Tigo Energy is currently generating about -0.11 per unit of risk. If you would invest 1,341 in United Utilities Group on October 7, 2024 and sell it today you would earn a total of 53.00 from holding United Utilities Group or generate 3.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
United Utilities Group vs. Tigo Energy
Performance |
Timeline |
United Utilities |
Tigo Energy |
United Utilities and Tigo Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Utilities and Tigo Energy
The main advantage of trading using opposite United Utilities and Tigo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Tigo Energy 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 Tigo Energy will offset losses from the drop in Tigo Energy's long position.United Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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