Correlation Between United Internet and Iwatani

Can any of the company-specific risk be diversified away by investing in both United Internet and Iwatani 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 Iwatani 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 Iwatani, you can compare the effects of market volatilities on United Internet and Iwatani 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 Iwatani. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Iwatani.

Diversification Opportunities for United Internet and Iwatani

0.67

Correlation Coefficient

United Internet  Iwatani

Poor diversification

The 3 months correlation between United and Iwatani is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Iwatani in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iwatani 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 Iwatani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iwatani has no effect on the direction of United Internet i.e., United Internet and Iwatani go up and down completely randomly.

Pair Corralation between United Internet and Iwatani

Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Iwatani. In addition to that, United Internet is 1.6 times more volatile than Iwatani. It trades about -0.09 of its total potential returns per unit of risk. Iwatani is currently generating about -0.14 per unit of volatility. If you would invest  1,225  in Iwatani on September 17, 2024 and sell it today you would lose (159.00) from holding Iwatani or give up 12.98% of portfolio value over 90 days.

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

United Internet AG  vs.  Iwatani

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Iwatani

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iwatani has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with United Internet and Iwatani

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

The idea behind United Internet AG and Iwatani 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.