Correlation Between Caltagirone SpA and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA and Element Solutions 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 Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and Element Solutions, you can compare the effects of market volatilities on Caltagirone SpA and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and Element Solutions.
Diversification Opportunities for Caltagirone SpA and Element Solutions
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caltagirone and Element is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and Element Solutions go up and down completely randomly.
Pair Corralation between Caltagirone SpA and Element Solutions
Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 1.26 times more return on investment than Element Solutions. However, Caltagirone SpA is 1.26 times more volatile than Element Solutions. It trades about 0.08 of its potential returns per unit of risk. Element Solutions is currently generating about 0.08 per unit of risk. If you would invest 542.00 in Caltagirone SpA on September 21, 2024 and sell it today you would earn a total of 52.00 from holding Caltagirone SpA or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caltagirone SpA vs. Element Solutions
Performance |
| Timeline |
| Caltagirone SpA |
| Element Solutions |
Caltagirone SpA and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caltagirone SpA and Element Solutions
The main advantage of trading using opposite Caltagirone SpA and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc |
| Element Solutions vs. GFL ENVIRONM | Element Solutions vs. RELIANCE STEEL AL | Element Solutions vs. Entravision Communications | Element Solutions vs. Caltagirone SpA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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