Correlation Between United Internet and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both United Internet and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES, you can compare the effects of market volatilities on United Internet and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and NORTHEAST UTILITIES.
Diversification Opportunities for United Internet and NORTHEAST UTILITIES
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and NORTHEAST is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of United Internet i.e., United Internet and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between United Internet and NORTHEAST UTILITIES
Assuming the 90 days trading horizon United Internet AG is expected to generate 1.32 times more return on investment than NORTHEAST UTILITIES. However, United Internet is 1.32 times more volatile than NORTHEAST UTILITIES. It trades about 0.19 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.05 per unit of risk. If you would invest 1,560 in United Internet AG on December 30, 2024 and sell it today you would earn a total of 488.00 from holding United Internet AG or generate 31.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Internet AG vs. NORTHEAST UTILITIES
Performance |
Timeline |
United Internet AG |
NORTHEAST UTILITIES |
United Internet and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Internet and NORTHEAST UTILITIES
The main advantage of trading using opposite United Internet and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.United Internet vs. Waste Management | United Internet vs. Elmos Semiconductor SE | United Internet vs. UNITED UTILITIES GR | United Internet vs. Cleanaway Waste Management |
NORTHEAST UTILITIES vs. STRAYER EDUCATION | NORTHEAST UTILITIES vs. Air Transport Services | NORTHEAST UTILITIES vs. Grand Canyon Education | NORTHEAST UTILITIES vs. Transport International Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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