Correlation Between Metro Bank and FinecoBank SpA
Can any of the company-specific risk be diversified away by investing in both Metro Bank and FinecoBank 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 Metro Bank and FinecoBank SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Bank PLC and FinecoBank SpA, you can compare the effects of market volatilities on Metro Bank and FinecoBank 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 Metro Bank with a short position of FinecoBank SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Bank and FinecoBank SpA.
Diversification Opportunities for Metro Bank and FinecoBank SpA
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metro and FinecoBank is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Metro Bank PLC and FinecoBank SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinecoBank SpA and Metro Bank 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 Metro Bank PLC are associated (or correlated) with FinecoBank SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinecoBank SpA has no effect on the direction of Metro Bank i.e., Metro Bank and FinecoBank SpA go up and down completely randomly.
Pair Corralation between Metro Bank and FinecoBank SpA
Assuming the 90 days trading horizon Metro Bank is expected to generate 1.43 times less return on investment than FinecoBank SpA. In addition to that, Metro Bank is 1.97 times more volatile than FinecoBank SpA. It trades about 0.11 of its total potential returns per unit of risk. FinecoBank SpA is currently generating about 0.3 per unit of volatility. If you would invest 1,679 in FinecoBank SpA on November 1, 2024 and sell it today you would earn a total of 140.00 from holding FinecoBank SpA or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Bank PLC vs. FinecoBank SpA
Performance |
| Timeline |
| Metro Bank PLC |
| FinecoBank SpA |
Metro Bank and FinecoBank SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Bank and FinecoBank SpA
The main advantage of trading using opposite Metro Bank and FinecoBank SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Bank position performs unexpectedly, FinecoBank 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 FinecoBank SpA will offset losses from the drop in FinecoBank SpA's long position.| Metro Bank vs. Futura Medical | Metro Bank vs. Nordea Bank Abp | Metro Bank vs. Bankers Investment Trust | Metro Bank vs. Sartorius Stedim Biotech |
| FinecoBank SpA vs. Adriatic Metals | FinecoBank SpA vs. Power Metal Resources | FinecoBank SpA vs. Allianz Technology Trust | FinecoBank SpA vs. Eneraqua Technologies PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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