Correlation Between United Breweries and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both United Breweries and UniCredit SpA 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 Breweries and UniCredit SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and UniCredit SpA, you can compare the effects of market volatilities on United Breweries and UniCredit SpA 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 Breweries with a short position of UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and UniCredit SpA.
Diversification Opportunities for United Breweries and UniCredit SpA
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and UniCredit is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and United Breweries 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 Breweries Co are associated (or correlated) with UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of United Breweries i.e., United Breweries and UniCredit SpA go up and down completely randomly.
Pair Corralation between United Breweries and UniCredit SpA
Assuming the 90 days trading horizon United Breweries Co is expected to under-perform the UniCredit SpA. But the stock apears to be less risky and, when comparing its historical volatility, United Breweries Co is 1.0 times less risky than UniCredit SpA. The stock trades about 0.0 of its potential returns per unit of risk. The UniCredit SpA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,350 in UniCredit SpA on September 5, 2024 and sell it today you would earn a total of 1,410 from holding UniCredit SpA or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
United Breweries Co vs. UniCredit SpA
Performance |
| Timeline |
| United Breweries |
| UniCredit SpA |
United Breweries and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and UniCredit SpA
The main advantage of trading using opposite United Breweries and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| UniCredit SpA vs. BNP PARIBAS ADR | UniCredit SpA vs. Lloyds Banking Group | UniCredit SpA vs. KBC Group NV |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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