Correlation Between Power Metal and United Internet
Can any of the company-specific risk be diversified away by investing in both Power Metal 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 Power Metal and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metal Resources and United Internet AG, you can compare the effects of market volatilities on Power Metal 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 Power Metal with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metal and United Internet.
Diversification Opportunities for Power Metal and United Internet
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and United is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources 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 Power Metal 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 Power Metal Resources 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 Power Metal i.e., Power Metal and United Internet go up and down completely randomly.
Pair Corralation between Power Metal and United Internet
Assuming the 90 days trading horizon Power Metal Resources is expected to generate 2.03 times more return on investment than United Internet. However, Power Metal is 2.03 times more volatile than United Internet AG. It trades about 0.03 of its potential returns per unit of risk. United Internet AG is currently generating about -0.02 per unit of risk. If you would invest 1,350 in Power Metal Resources on September 14, 2024 and sell it today you would earn a total of 163.00 from holding Power Metal Resources or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Metal Resources vs. United Internet AG
Performance |
| Timeline |
| Power Metal Resources |
| United Internet AG |
Power Metal and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metal and United Internet
The main advantage of trading using opposite Power Metal and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal 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.| Power Metal vs. Givaudan SA | Power Metal vs. Antofagasta PLC | Power Metal vs. Ferrexpo PLC | Power Metal vs. Atalaya Mining |
| United Internet vs. Tyson Foods Cl | United Internet vs. Virgin Wines UK | United Internet vs. Ebro Foods | United Internet vs. Vienna Insurance Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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