Correlation Between Natuzzi SpA and IRobot
Can any of the company-specific risk be diversified away by investing in both Natuzzi SpA and IRobot 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 Natuzzi SpA and IRobot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natuzzi SpA and iRobot, you can compare the effects of market volatilities on Natuzzi SpA and IRobot 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 Natuzzi SpA with a short position of IRobot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natuzzi SpA and IRobot.
Diversification Opportunities for Natuzzi SpA and IRobot
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Natuzzi and IRobot is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Natuzzi SpA and iRobot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRobot and Natuzzi SpA 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 Natuzzi SpA are associated (or correlated) with IRobot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRobot has no effect on the direction of Natuzzi SpA i.e., Natuzzi SpA and IRobot go up and down completely randomly.
Pair Corralation between Natuzzi SpA and IRobot
Considering the 90-day investment horizon Natuzzi SpA is expected to generate 9.05 times more return on investment than IRobot. However, Natuzzi SpA is 9.05 times more volatile than iRobot. It trades about 0.04 of its potential returns per unit of risk. iRobot is currently generating about -0.05 per unit of risk. If you would invest 599.00 in Natuzzi SpA on August 24, 2024 and sell it today you would lose (166.00) from holding Natuzzi SpA or give up 27.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.77% |
| Values | Daily Returns |
Natuzzi SpA vs. iRobot
Performance |
| Timeline |
| Natuzzi SpA |
| iRobot |
Natuzzi SpA and IRobot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natuzzi SpA and IRobot
The main advantage of trading using opposite Natuzzi SpA and IRobot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natuzzi SpA position performs unexpectedly, IRobot 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 IRobot will offset losses from the drop in IRobot's long position.| Natuzzi SpA vs. Bassett Furniture Industries | Natuzzi SpA vs. Hooker Furniture | Natuzzi SpA vs. Flexsteel Industries | Natuzzi SpA vs. Ethan Allen Interiors |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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