Correlation Between Basic Materials and Pettenati
Can any of the company-specific risk be diversified away by investing in both Basic Materials and Pettenati 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 Basic Materials and Pettenati into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Pettenati SA Industria, you can compare the effects of market volatilities on Basic Materials and Pettenati 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 Basic Materials with a short position of Pettenati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Pettenati.
Diversification Opportunities for Basic Materials and Pettenati
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Basic and Pettenati is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and Pettenati SA Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pettenati SA Industria and Basic Materials 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 Basic Materials are associated (or correlated) with Pettenati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pettenati SA Industria has no effect on the direction of Basic Materials i.e., Basic Materials and Pettenati go up and down completely randomly.
Pair Corralation between Basic Materials and Pettenati
Assuming the 90 days trading horizon Basic Materials is expected to under-perform the Pettenati. But the index apears to be less risky and, when comparing its historical volatility, Basic Materials is 1.8 times less risky than Pettenati. The index trades about 0.0 of its potential returns per unit of risk. The Pettenati SA Industria is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 563.00 in Pettenati SA Industria on August 24, 2024 and sell it today you would earn a total of 97.00 from holding Pettenati SA Industria or generate 17.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Basic Materials vs. Pettenati SA Industria
Performance |
| Timeline |
Basic Materials and Pettenati Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Pettenati SA Industria
Pair trading matchups for Pettenati
Pair Trading with Basic Materials and Pettenati
The main advantage of trading using opposite Basic Materials and Pettenati positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, Pettenati 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 Pettenati will offset losses from the drop in Pettenati's long position.| Basic Materials vs. TAL Education Group | Basic Materials vs. salesforce inc | Basic Materials vs. Apartment Investment and | Basic Materials vs. Bank of America |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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