Correlation Between United Internet and Air New
Can any of the company-specific risk be diversified away by investing in both United Internet and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on United Internet and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Air New.
Diversification Opportunities for United Internet and Air New
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Air is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of United Internet i.e., United Internet and Air New go up and down completely randomly.
Pair Corralation between United Internet and Air New
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Air New. In addition to that, United Internet is 1.99 times more volatile than Air New Zealand. It trades about -0.24 of its total potential returns per unit of risk. Air New Zealand is currently generating about 0.18 per unit of volatility. If you would invest 29.00 in Air New Zealand on September 5, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Internet AG vs. Air New Zealand
Performance |
| Timeline |
| United Internet AG |
| Air New Zealand |
United Internet and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Air New
The main advantage of trading using opposite United Internet and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| United Internet vs. Air New Zealand | United Internet vs. Materialise NV | United Internet vs. FORWARD AIR P | United Internet vs. Fair Isaac 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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