Correlation Between United Internet and Intercontinental

Can any of the company-specific risk be diversified away by investing in both United Internet and Intercontinental 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 Intercontinental 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 Intercontinental Exchange, you can compare the effects of market volatilities on United Internet and Intercontinental 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 Intercontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Intercontinental.

Diversification Opportunities for United Internet and Intercontinental

-0.05

Correlation Coefficient

United Internet  Intercontinental

Good diversification

The 3 months correlation between United and Intercontinental is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Intercontinental Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercontinental Exchange 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 Intercontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercontinental Exchange has no effect on the direction of United Internet i.e., United Internet and Intercontinental go up and down completely randomly.

Pair Corralation between United Internet and Intercontinental

Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Intercontinental. In addition to that, United Internet is 1.27 times more volatile than Intercontinental Exchange. It trades about -0.11 of its total potential returns per unit of risk. Intercontinental Exchange is currently generating about 0.03 per unit of volatility. If you would invest  14,063  in Intercontinental Exchange on September 28, 2024 and sell it today you would earn a total of  357.00  from holding Intercontinental Exchange or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

United Internet AG  vs.  Intercontinental Exchange

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Intercontinental Exchange

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intercontinental Exchange are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intercontinental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Internet and Intercontinental

The main advantage of trading using opposite United Internet and Intercontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Intercontinental 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 Intercontinental will offset losses from the drop in Intercontinental's long position.

The idea behind United Internet AG and Intercontinental Exchange pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.