Correlation Between Uniteds and Dividend Growth
Can any of the company-specific risk be diversified away by investing in both Uniteds and Dividend Growth 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 Uniteds and Dividend Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniteds Limited and Dividend Growth Split, you can compare the effects of market volatilities on Uniteds and Dividend Growth 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 Uniteds with a short position of Dividend Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniteds and Dividend Growth.
Diversification Opportunities for Uniteds and Dividend Growth
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Uniteds and Dividend is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Uniteds Limited and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split and Uniteds 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 Uniteds Limited are associated (or correlated) with Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of Uniteds i.e., Uniteds and Dividend Growth go up and down completely randomly.
Pair Corralation between Uniteds and Dividend Growth
Assuming the 90 days trading horizon Uniteds Limited is expected to under-perform the Dividend Growth. But the stock apears to be less risky and, when comparing its historical volatility, Uniteds Limited is 2.28 times less risky than Dividend Growth. The stock trades about -0.11 of its potential returns per unit of risk. The Dividend Growth Split is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 603.00 in Dividend Growth Split on January 25, 2024 and sell it today you would earn a total of 10.00 from holding Dividend Growth Split or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniteds Limited vs. Dividend Growth Split
Performance |
| Timeline |
| Uniteds Limited |
| Dividend Growth Split |
Uniteds and Dividend Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniteds and Dividend Growth
The main advantage of trading using opposite Uniteds and Dividend Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniteds position performs unexpectedly, Dividend Growth 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 Dividend Growth will offset losses from the drop in Dividend Growth's long position.| Uniteds vs. Canadian Imperial Bank | Uniteds vs. Fairfax Financial Holdings | Uniteds vs. Bank of Montreal | Uniteds vs. Bank of Montreal |
| Dividend Growth vs. Canadian Imperial Bank | Dividend Growth vs. Fairfax Financial Holdings | Dividend Growth vs. Bank of Montreal | Dividend Growth vs. Bank of Montreal |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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