Correlation Between United Internet and FMC Corp
Can any of the company-specific risk be diversified away by investing in both United Internet and FMC Corp 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 FMC Corp 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 FMC Corp, you can compare the effects of market volatilities on United Internet and FMC Corp 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 FMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and FMC Corp.
Diversification Opportunities for United Internet and FMC Corp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and FMC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and FMC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corp 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 FMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corp has no effect on the direction of United Internet i.e., United Internet and FMC Corp go up and down completely randomly.
Pair Corralation between United Internet and FMC Corp
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the FMC Corp. In addition to that, United Internet is 1.08 times more volatile than FMC Corp. It trades about -0.14 of its total potential returns per unit of risk. FMC Corp is currently generating about -0.06 per unit of volatility. If you would invest 6,416 in FMC Corp on September 2, 2024 and sell it today you would lose (591.00) from holding FMC Corp or give up 9.21% 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. FMC Corp
Performance |
| Timeline |
| United Internet AG |
| FMC Corp |
United Internet and FMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and FMC Corp
The main advantage of trading using opposite United Internet and FMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, FMC Corp 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 FMC Corp will offset losses from the drop in FMC Corp's long position.| United Internet vs. Ashtead Technology Holdings | United Internet vs. Foresight Environmental Infrastructure | United Internet vs. Microchip Technology | United Internet vs. JD Sports Fashion |
| FMC Corp vs. Uniper SE | FMC Corp vs. Mulberry Group PLC | FMC Corp vs. London Security Plc | FMC Corp vs. Triad Group PLC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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