Correlation Between Entravision Communications and United Internet

Can any of the company-specific risk be diversified away by investing in both Entravision Communications 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 Entravision Communications and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entravision Communications and United Internet AG, you can compare the effects of market volatilities on Entravision Communications 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 Entravision Communications with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and United Internet.

Diversification Opportunities for Entravision Communications and United Internet

0.76

Correlation Coefficient

Entravision Communications  United Internet

Poor diversification

The 3 months correlation between Entravision and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications 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 Entravision Communications 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 Entravision Communications 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 Entravision Communications i.e., Entravision Communications and United Internet go up and down completely randomly.

Pair Corralation between Entravision Communications and United Internet

Assuming the 90 days horizon Entravision Communications is expected to generate 1.15 times less return on investment than United Internet. In addition to that, Entravision Communications is 1.43 times more volatile than United Internet AG. It trades about 0.14 of its total potential returns per unit of risk. United Internet AG is currently generating about 0.23 per unit of volatility. If you would invest  1,750  in United Internet AG on April 21, 2025 and sell it today you would earn a total of  720.00  from holding United Internet AG or generate 41.14% return on investment over 90 days.

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

Entravision Communications  vs.  United Internet AG

Entravision Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

United Internet AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Internet AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, United Internet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entravision Communications and United Internet

The main advantage of trading using opposite Entravision Communications and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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.

The idea behind Entravision Communications and United Internet AG 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.