Correlation Between United Internet and BHP Group
Can any of the company-specific risk be diversified away by investing in both United Internet and BHP 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 BHP 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 BHP Group Limited, you can compare the effects of market volatilities on United Internet and BHP 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and BHP Group.
Diversification Opportunities for United Internet and BHP Group
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and BHP is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of United Internet i.e., United Internet and BHP Group go up and down completely randomly.
Pair Corralation between United Internet and BHP Group
Assuming the 90 days trading horizon United Internet AG is expected to generate 0.9 times more return on investment than BHP Group. However, United Internet AG is 1.12 times less risky than BHP Group. It trades about 0.12 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.01 per unit of risk. If you would invest 1,573 in United Internet AG on September 15, 2024 and sell it today you would earn a total of 46.00 from holding United Internet AG or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. BHP Group Limited
Performance |
| Timeline |
| United Internet AG |
| BHP Group Limited |
United Internet and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and BHP Group
The main advantage of trading using opposite United Internet and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, BHP 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 BHP Group will offset losses from the drop in BHP Group's long position.| United Internet vs. Superior Plus Corp | United Internet vs. SIVERS SEMICONDUCTORS AB | United Internet vs. Norsk Hydro ASA | United Internet vs. Reliance Steel Aluminum |
| BHP Group vs. BRIT AMER TOBACCO | BHP Group vs. United Internet AG | BHP Group vs. Scandinavian Tobacco Group | BHP Group vs. BW OFFSHORE LTD |
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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