Correlation Between Caltagirone SpA and EnviTec Biogas
Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA and EnviTec Biogas 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 Caltagirone SpA and EnviTec Biogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and EnviTec Biogas AG, you can compare the effects of market volatilities on Caltagirone SpA and EnviTec Biogas 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 Caltagirone SpA with a short position of EnviTec Biogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and EnviTec Biogas.
Diversification Opportunities for Caltagirone SpA and EnviTec Biogas
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caltagirone and EnviTec is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and EnviTec Biogas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviTec Biogas AG and Caltagirone 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 Caltagirone SpA are associated (or correlated) with EnviTec Biogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviTec Biogas AG has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and EnviTec Biogas go up and down completely randomly.
Pair Corralation between Caltagirone SpA and EnviTec Biogas
Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 0.76 times more return on investment than EnviTec Biogas. However, Caltagirone SpA is 1.31 times less risky than EnviTec Biogas. It trades about 0.09 of its potential returns per unit of risk. EnviTec Biogas AG is currently generating about 0.01 per unit of risk. If you would invest 372.00 in Caltagirone SpA on September 14, 2024 and sell it today you would earn a total of 236.00 from holding Caltagirone SpA or generate 63.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caltagirone SpA vs. EnviTec Biogas AG
Performance |
| Timeline |
| Caltagirone SpA |
| EnviTec Biogas AG |
Caltagirone SpA and EnviTec Biogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caltagirone SpA and EnviTec Biogas
The main advantage of trading using opposite Caltagirone SpA and EnviTec Biogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA position performs unexpectedly, EnviTec Biogas 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 EnviTec Biogas will offset losses from the drop in EnviTec Biogas' long position.| Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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