Correlation Between Poste Italiane and Northland Power
Can any of the company-specific risk be diversified away by investing in both Poste Italiane and Northland Power 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 Poste Italiane and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poste Italiane SpA and Northland Power, you can compare the effects of market volatilities on Poste Italiane and Northland Power 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 Poste Italiane with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poste Italiane and Northland Power.
Diversification Opportunities for Poste Italiane and Northland Power
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Poste and Northland is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Poste Italiane SpA and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and Poste Italiane 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 Poste Italiane SpA are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of Poste Italiane i.e., Poste Italiane and Northland Power go up and down completely randomly.
Pair Corralation between Poste Italiane and Northland Power
Assuming the 90 days horizon Poste Italiane SpA is expected to generate 0.36 times more return on investment than Northland Power. However, Poste Italiane SpA is 2.74 times less risky than Northland Power. It trades about 0.14 of its potential returns per unit of risk. Northland Power is currently generating about 0.0 per unit of risk. If you would invest 927.00 in Poste Italiane SpA on September 14, 2024 and sell it today you would earn a total of 447.00 from holding Poste Italiane SpA or generate 48.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Poste Italiane SpA vs. Northland Power
Performance |
| Timeline |
| Poste Italiane SpA |
| Northland Power |
Poste Italiane and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poste Italiane and Northland Power
The main advantage of trading using opposite Poste Italiane and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poste Italiane position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| Poste Italiane vs. PLAYMATES TOYS | Poste Italiane vs. TRADEDOUBLER AB SK | Poste Italiane vs. ePlay Digital | Poste Italiane vs. Playtech plc |
| Northland Power vs. Dairy Farm International | Northland Power vs. SIEM OFFSHORE NEW | Northland Power vs. Martin Marietta Materials | Northland Power vs. Rayonier Advanced Materials |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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