Correlation Between United Utilities and WPLAU

Can any of the company-specific risk be diversified away by investing in both United Utilities and WPLAU 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 WPLAU 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 WPLAU 37 15 SEP 26, you can compare the effects of market volatilities on United Utilities and WPLAU 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 WPLAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and WPLAU.

Diversification Opportunities for United Utilities and WPLAU

0.36

Correlation Coefficient

United Utilities  WPLAU

Weak diversification

The 3 months correlation between United and WPLAU is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and WPLAU 37 15 SEP 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPLAU 37 15 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 WPLAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPLAU 37 15 has no effect on the direction of United Utilities i.e., United Utilities and WPLAU go up and down completely randomly.

Pair Corralation between United Utilities and WPLAU

If you would invest  1,394  in United Utilities Group on October 8, 2024 and sell it today you would earn a total of  0.00  from holding United Utilities Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	52.63%
Values	Daily Returns

United Utilities Group  vs.  WPLAU 37 15 SEP 26

United Utilities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Utilities Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, United Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WPLAU 37 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPLAU 37 15 SEP 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for WPLAU 37 15 SEP 26 investors.

Pair Trading with United Utilities and WPLAU

The main advantage of trading using opposite United Utilities and WPLAU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, WPLAU 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 WPLAU will offset losses from the drop in WPLAU's long position.

The idea behind United Utilities Group and WPLAU 37 15 SEP 26 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.