Correlation Between United Maritime and Williams Companies

Can any of the company-specific risk be diversified away by investing in both United Maritime and Williams Companies 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 Maritime and Williams Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Maritime and Williams Companies, you can compare the effects of market volatilities on United Maritime and Williams Companies 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 Maritime with a short position of Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Maritime and Williams Companies.

Diversification Opportunities for United Maritime and Williams Companies

-0.79

Correlation Coefficient

United Maritime  Williams Companies

Pay attention - limited upside

The 3 months correlation between United and Williams is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding United Maritime and Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Companies and United Maritime 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 Maritime are associated (or correlated) with Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Companies has no effect on the direction of United Maritime i.e., United Maritime and Williams Companies go up and down completely randomly.

Pair Corralation between United Maritime and Williams Companies

Given the investment horizon of 90 days United Maritime is expected to under-perform the Williams Companies. In addition to that, United Maritime is 1.37 times more volatile than Williams Companies. It trades about -0.25 of its total potential returns per unit of risk. Williams Companies is currently generating about 0.18 per unit of volatility. If you would invest  4,563  in Williams Companies on September 24, 2024 and sell it today you would earn a total of  822.00  from holding Williams Companies or generate 18.01% return on investment over 90 days.

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

United Maritime  vs.  Williams Companies

United Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Williams Companies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Companies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Williams Companies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Maritime and Williams Companies

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

The idea behind United Maritime and Williams Companies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .