Correlation Between United Internet and Marwyn Value

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

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

Diversification Opportunities for United Internet and Marwyn Value

0.65

Correlation Coefficient

United Internet  Marwyn Value

Poor diversification

The 3 months correlation between United and Marwyn is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Marwyn Value Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marwyn Value Investors and United Internet 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 Internet AG are associated (or correlated) with Marwyn Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marwyn Value Investors has no effect on the direction of United Internet i.e., United Internet and Marwyn Value go up and down completely randomly.

Pair Corralation between United Internet and Marwyn Value

Assuming the 90 days trading horizon United Internet AG is expected to generate 2.18 times more return on investment than Marwyn Value. However, United Internet is 2.18 times more volatile than Marwyn Value Investors. It trades about 0.2 of its potential returns per unit of risk. Marwyn Value Investors is currently generating about 0.35 per unit of risk. If you would invest  1,501  in United Internet AG on December 23, 2024 and sell it today you would earn a total of  413.00  from holding United Internet AG or generate 27.51% return on investment over 90 days.

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

United Internet AG  vs.  Marwyn Value Investors

United Internet AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Internet AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, United Internet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Marwyn Value Investors

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Marwyn Value Investors are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Marwyn Value exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Internet and Marwyn Value

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

The idea behind United Internet AG and Marwyn Value Investors 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.