Correlation Between ITALIAN WINE and INNOVATEC SPA
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE and INNOVATEC 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 ITALIAN WINE and INNOVATEC SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and INNOVATEC SPA, you can compare the effects of market volatilities on ITALIAN WINE and INNOVATEC 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 ITALIAN WINE with a short position of INNOVATEC SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and INNOVATEC SPA.
Diversification Opportunities for ITALIAN WINE and INNOVATEC SPA
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ITALIAN and INNOVATEC is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and INNOVATEC SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOVATEC SPA and ITALIAN WINE 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 ITALIAN WINE BRANDS are associated (or correlated) with INNOVATEC SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOVATEC SPA has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and INNOVATEC SPA go up and down completely randomly.
Pair Corralation between ITALIAN WINE and INNOVATEC SPA
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 0.2 times more return on investment than INNOVATEC SPA. However, ITALIAN WINE BRANDS is 5.08 times less risky than INNOVATEC SPA. It trades about 0.01 of its potential returns per unit of risk. INNOVATEC SPA is currently generating about -0.16 per unit of risk. If you would invest 2,230 in ITALIAN WINE BRANDS on October 20, 2024 and sell it today you would lose (10.00) from holding ITALIAN WINE BRANDS or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. INNOVATEC SPA
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| INNOVATEC SPA |
ITALIAN WINE and INNOVATEC SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and INNOVATEC SPA
The main advantage of trading using opposite ITALIAN WINE and INNOVATEC SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE position performs unexpectedly, INNOVATEC 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 INNOVATEC SPA will offset losses from the drop in INNOVATEC SPA's long position.| ITALIAN WINE vs. THAI BEVERAGE | ITALIAN WINE vs. SANOK RUBBER ZY | ITALIAN WINE vs. SAN MIGUEL BREWERY | ITALIAN WINE vs. Compagnie Plastic Omnium |
| INNOVATEC SPA vs. Duke Energy | INNOVATEC SPA vs. WEC Energy Group | INNOVATEC SPA vs. ENDESA ADR 12 | INNOVATEC SPA vs. CMS Energy |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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