Correlation Between Aedas Homes and United Internet
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and United Internet 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 Aedas Homes and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and United Internet AG, you can compare the effects of market volatilities on Aedas Homes and United Internet 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 Aedas Homes with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and United Internet.
Diversification Opportunities for Aedas Homes and United Internet
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aedas and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG and Aedas Homes 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 Aedas Homes SA are associated (or correlated) with United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Aedas Homes i.e., Aedas Homes and United Internet go up and down completely randomly.
Pair Corralation between Aedas Homes and United Internet
Assuming the 90 days horizon Aedas Homes SA is expected to generate 1.97 times more return on investment than United Internet. However, Aedas Homes is 1.97 times more volatile than United Internet AG. It trades about 0.16 of its potential returns per unit of risk. United Internet AG is currently generating about -0.35 per unit of risk. If you would invest 2,392 in Aedas Homes SA on October 14, 2024 and sell it today you would earn a total of 143.00 from holding Aedas Homes SA or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. United Internet AG
Performance |
| Timeline |
| Aedas Homes SA |
| United Internet AG |
Aedas Homes and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and United Internet
The main advantage of trading using opposite Aedas Homes and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| Aedas Homes vs. International Consolidated Airlines | Aedas Homes vs. Corporate Office Properties | Aedas Homes vs. Aegean Airlines SA | Aedas Homes vs. Nok Airlines PCL |
| United Internet vs. Aedas Homes SA | United Internet vs. Perdoceo Education | United Internet vs. OFFICE DEPOT | United Internet vs. CITY OFFICE REIT |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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