Correlation Between Reinsurance Group and United Internet
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group 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 Reinsurance Group and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and United Internet AG, you can compare the effects of market volatilities on Reinsurance Group 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 Reinsurance Group with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and United Internet.
Diversification Opportunities for Reinsurance Group and United Internet
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Reinsurance and United is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of 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 Reinsurance Group 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 Reinsurance Group of 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 Reinsurance Group i.e., Reinsurance Group and United Internet go up and down completely randomly.
Pair Corralation between Reinsurance Group and United Internet
Assuming the 90 days trading horizon Reinsurance Group of is expected to under-perform the United Internet. But the stock apears to be less risky and, when comparing its historical volatility, Reinsurance Group of is 1.33 times less risky than United Internet. The stock trades about -0.26 of its potential returns per unit of risk. The United Internet AG is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,680 in United Internet AG on December 10, 2024 and sell it today you would earn a total of 191.00 from holding United Internet AG or generate 11.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Reinsurance Group of vs. United Internet AG
Performance |
Timeline |
Reinsurance Group |
United Internet AG |
Reinsurance Group and United Internet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reinsurance Group and United Internet
The main advantage of trading using opposite Reinsurance Group and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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.Reinsurance Group vs. GALENA MINING LTD | Reinsurance Group vs. United Internet AG | Reinsurance Group vs. Easy Software AG | Reinsurance Group vs. GRIFFIN MINING LTD |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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