Correlation Between WESCO International and UNITED INTERNET

Can any of the company-specific risk be diversified away by investing in both WESCO International 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 WESCO International and UNITED INTERNET into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WESCO International and UNITED INTERNET N, you can compare the effects of market volatilities on WESCO International 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 WESCO International with a short position of UNITED INTERNET. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESCO International and UNITED INTERNET.

Diversification Opportunities for WESCO International and UNITED INTERNET

0.8

Correlation Coefficient

WESCO International  UNITED INTERNET

Very poor diversification

The 3 months correlation between WESCO and UNITED is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International and UNITED INTERNET N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED INTERNET N and WESCO International 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 WESCO International 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 N has no effect on the direction of WESCO International i.e., WESCO International and UNITED INTERNET go up and down completely randomly.

Pair Corralation between WESCO International and UNITED INTERNET

Assuming the 90 days horizon WESCO International is expected to generate 0.89 times more return on investment than UNITED INTERNET. However, WESCO International is 1.12 times less risky than UNITED INTERNET. It trades about 0.26 of its potential returns per unit of risk. UNITED INTERNET N is currently generating about 0.23 per unit of risk. If you would invest  12,567  in WESCO International on April 22, 2025 and sell it today you would earn a total of  5,133  from holding WESCO International or generate 40.85% return on investment over 90 days.

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

WESCO International  vs.  UNITED INTERNET N

WESCO International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WESCO International are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WESCO International reported solid returns over the last few months and may actually be approaching a breakup point.

UNITED INTERNET N

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED INTERNET N are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, UNITED INTERNET unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WESCO International and UNITED INTERNET

The main advantage of trading using opposite WESCO International and UNITED INTERNET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International 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 WESCO International and UNITED INTERNET N 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.