Correlation Between United Internet and Tesco PLC
Can any of the company-specific risk be diversified away by investing in both United Internet and Tesco PLC 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 Tesco PLC 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 Tesco PLC, you can compare the effects of market volatilities on United Internet and Tesco PLC 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 Tesco PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Tesco PLC.
Diversification Opportunities for United Internet and Tesco PLC
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Tesco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Tesco PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesco 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 Tesco PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesco PLC has no effect on the direction of United Internet i.e., United Internet and Tesco PLC go up and down completely randomly.
Pair Corralation between United Internet and Tesco PLC
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Tesco PLC. In addition to that, United Internet is 3.27 times more volatile than Tesco PLC. It trades about -0.22 of its total potential returns per unit of risk. Tesco PLC is currently generating about 0.29 per unit of volatility. If you would invest 34,220 in Tesco PLC on September 1, 2024 and sell it today you would earn a total of 2,420 from holding Tesco PLC or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Internet AG vs. Tesco PLC
Performance |
| Timeline |
| United Internet AG |
| Tesco PLC |
United Internet and Tesco PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Tesco PLC
The main advantage of trading using opposite United Internet and Tesco PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Tesco PLC 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 Tesco PLC will offset losses from the drop in Tesco PLC's long position.| United Internet vs. Universal Display Corp | United Internet vs. Charter Communications Cl | United Internet vs. AMG Advanced Metallurgical | United Internet vs. Blackrock World Mining |
| Tesco PLC vs. Zegona Communications Plc | Tesco PLC vs. Wyndham Hotels Resorts | Tesco PLC vs. United Internet AG | Tesco PLC vs. Spirent Communications 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |