Correlation Between Gruppo Mutuionline and UNITED UTILITIES

Can any of the company-specific risk be diversified away by investing in both Gruppo Mutuionline and UNITED UTILITIES 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 Gruppo Mutuionline and UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gruppo Mutuionline SpA and UNITED UTILITIES GR, you can compare the effects of market volatilities on Gruppo Mutuionline and UNITED UTILITIES 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 Gruppo Mutuionline with a short position of UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gruppo Mutuionline and UNITED UTILITIES.

Diversification Opportunities for Gruppo Mutuionline and UNITED UTILITIES

0.8

Correlation Coefficient

Gruppo Mutuionline  UNITED UTILITIES

Very poor diversification

The 3 months correlation between Gruppo and UNITED is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gruppo Mutuionline SpA and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES and Gruppo Mutuionline 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 Gruppo Mutuionline SpA are associated (or correlated) with UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of Gruppo Mutuionline i.e., Gruppo Mutuionline and UNITED UTILITIES go up and down completely randomly.

Pair Corralation between Gruppo Mutuionline and UNITED UTILITIES

Assuming the 90 days trading horizon Gruppo Mutuionline SpA is expected to generate 1.44 times more return on investment than UNITED UTILITIES. However, Gruppo Mutuionline is 1.44 times more volatile than UNITED UTILITIES GR. It trades about 0.18 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.06 per unit of risk. If you would invest  3,155  in Gruppo Mutuionline SpA on September 20, 2024 and sell it today you would earn a total of  695.00  from holding Gruppo Mutuionline SpA or generate 22.03% return on investment over 90 days.

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

Gruppo Mutuionline SpA  vs.  UNITED UTILITIES GR

Gruppo Mutuionline SpA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gruppo Mutuionline SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gruppo Mutuionline unveiled solid returns over the last few months and may actually be approaching a breakup point.

UNITED UTILITIES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED UTILITIES GR are ranked lower than 4 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gruppo Mutuionline and UNITED UTILITIES

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

The idea behind Gruppo Mutuionline SpA and UNITED UTILITIES GR 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.