Correlation Between United Internet and Compass Group
Can any of the company-specific risk be diversified away by investing in both United Internet and Compass Group 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 Compass Group 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 Compass Group PLC, you can compare the effects of market volatilities on United Internet and Compass Group 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Compass Group.
Diversification Opportunities for United Internet and Compass Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Compass is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of United Internet i.e., United Internet and Compass Group go up and down completely randomly.
Pair Corralation between United Internet and Compass Group
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Compass Group. In addition to that, United Internet is 4.26 times more volatile than Compass Group PLC. It trades about -0.25 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.39 per unit of volatility. If you would invest 253,000 in Compass Group PLC on August 30, 2024 and sell it today you would earn a total of 17,600 from holding Compass Group PLC or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. Compass Group PLC
Performance |
| Timeline |
| United Internet AG |
| Compass Group PLC |
United Internet and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Compass Group
The main advantage of trading using opposite United Internet and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| United Internet vs. Lendinvest PLC | United Internet vs. Neometals | United Internet vs. Albion Technology General | United Internet vs. Jupiter Fund Management |
| Compass Group vs. Fresenius Medical Care | Compass Group vs. Albion Technology General | Compass Group vs. DXC Technology Co | Compass Group vs. Monster Beverage Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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