Correlation Between DFS Furniture and United Internet
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and United Internet 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 DFS Furniture and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and United Internet AG, you can compare the effects of market volatilities on DFS Furniture and United Internet 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 DFS Furniture with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and United Internet.
Diversification Opportunities for DFS Furniture and United Internet
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and United is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of DFS Furniture i.e., DFS Furniture and United Internet go up and down completely randomly.
Pair Corralation between DFS Furniture and United Internet
Assuming the 90 days trading horizon DFS Furniture PLC is expected to under-perform the United Internet. But the stock apears to be less risky and, when comparing its historical volatility, DFS Furniture PLC is 1.03 times less risky than United Internet. The stock trades about -0.38 of its potential returns per unit of risk. The United Internet AG is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 1,571 in United Internet AG on October 15, 2024 and sell it today you would lose (88.00) from holding United Internet AG or give up 5.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DFS Furniture PLC vs. United Internet AG
Performance |
Timeline |
DFS Furniture PLC |
United Internet AG |
DFS Furniture and United Internet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DFS Furniture and United Internet
The main advantage of trading using opposite DFS Furniture and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, United Internet 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 Internet will offset losses from the drop in United Internet's long position.DFS Furniture vs. Liontrust Asset Management | DFS Furniture vs. Litigation Capital Management | DFS Furniture vs. Learning Technologies Group | DFS Furniture vs. Jupiter Fund Management |
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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 Stocks Directory module to find actively traded stocks across global markets.
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