Correlation Between Ferrari NV and Old Republic
Can any of the company-specific risk be diversified away by investing in both Ferrari NV and Old Republic 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 Ferrari NV and Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrari NV and Old Republic International, you can compare the effects of market volatilities on Ferrari NV and Old Republic 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 Ferrari NV with a short position of Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrari NV and Old Republic.
Diversification Opportunities for Ferrari NV and Old Republic
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ferrari and Old is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ferrari NV and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna and Ferrari NV 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 Ferrari NV are associated (or correlated) with Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Ferrari NV i.e., Ferrari NV and Old Republic go up and down completely randomly.
Pair Corralation between Ferrari NV and Old Republic
Given the investment horizon of 90 days Ferrari NV is expected to under-perform the Old Republic. In addition to that, Ferrari NV is 1.68 times more volatile than Old Republic International. It trades about -0.23 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.4 per unit of volatility. If you would invest 3,529 in Old Republic International on August 31, 2024 and sell it today you would earn a total of 369.00 from holding Old Republic International or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrari NV vs. Old Republic International
Performance |
| Timeline |
| Ferrari NV |
| Old Republic Interna |
Ferrari NV and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrari NV and Old Republic
The main advantage of trading using opposite Ferrari NV and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrari NV position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Ferrari NV vs. Tesla Inc | Ferrari NV vs. Li Auto | Ferrari NV vs. Rivian Automotive | Ferrari NV vs. Lucid Group |
| Old Republic vs. American International Group | Old Republic vs. Hartford Financial Services | Old Republic vs. Goosehead Insurance | Old Republic vs. Enstar Group Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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