Correlation Between Cboe UK and Gruppo MutuiOnline

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Can any of the company-specific risk be diversified away by investing in both Cboe UK and Gruppo MutuiOnline 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 Cboe UK and Gruppo MutuiOnline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cboe UK Consumer and Gruppo MutuiOnline SpA, you can compare the effects of market volatilities on Cboe UK and Gruppo MutuiOnline 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 Cboe UK with a short position of Gruppo MutuiOnline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cboe UK and Gruppo MutuiOnline.

Diversification Opportunities for Cboe UK and Gruppo MutuiOnline

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Cboe and Gruppo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cboe UK Consumer and Gruppo MutuiOnline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo MutuiOnline SpA and Cboe UK 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 Cboe UK Consumer are associated (or correlated) with Gruppo MutuiOnline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo MutuiOnline SpA has no effect on the direction of Cboe UK i.e., Cboe UK and Gruppo MutuiOnline go up and down completely randomly.
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Pair Corralation between Cboe UK and Gruppo MutuiOnline

Assuming the 90 days trading horizon Cboe UK Consumer is expected to generate 0.66 times more return on investment than Gruppo MutuiOnline. However, Cboe UK Consumer is 1.5 times less risky than Gruppo MutuiOnline. It trades about 0.29 of its potential returns per unit of risk. Gruppo MutuiOnline SpA is currently generating about -0.12 per unit of risk. If you would invest  3,136,105  in Cboe UK Consumer on September 14, 2024 and sell it today you would earn a total of  165,273  from holding Cboe UK Consumer or generate 5.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy45.45%
ValuesDaily Returns

Cboe UK Consumer  vs.  Gruppo MutuiOnline SpA

 Performance 
       Timeline  

Cboe UK and Gruppo MutuiOnline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cboe UK and Gruppo MutuiOnline

The main advantage of trading using opposite Cboe UK and Gruppo MutuiOnline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cboe UK position performs unexpectedly, Gruppo MutuiOnline 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 Gruppo MutuiOnline will offset losses from the drop in Gruppo MutuiOnline's long position.
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The idea behind Cboe UK Consumer and Gruppo MutuiOnline SpA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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