Correlation Between UniCredit SpA and Erbud SA
Can any of the company-specific risk be diversified away by investing in both UniCredit SpA and Erbud SA 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 UniCredit SpA and Erbud SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UniCredit SpA and Erbud SA, you can compare the effects of market volatilities on UniCredit SpA and Erbud SA 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 UniCredit SpA with a short position of Erbud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UniCredit SpA and Erbud SA.
Diversification Opportunities for UniCredit SpA and Erbud SA
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UniCredit and Erbud is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Erbud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erbud SA and UniCredit 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 UniCredit SpA are associated (or correlated) with Erbud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erbud SA has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Erbud SA go up and down completely randomly.
Pair Corralation between UniCredit SpA and Erbud SA
Assuming the 90 days trading horizon UniCredit SpA is expected to under-perform the Erbud SA. But the stock apears to be less risky and, when comparing its historical volatility, UniCredit SpA is 1.03 times less risky than Erbud SA. The stock trades about -0.33 of its potential returns per unit of risk. The Erbud SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,210 in Erbud SA on September 3, 2024 and sell it today you would earn a total of 70.00 from holding Erbud SA or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
UniCredit SpA vs. Erbud SA
Performance |
| Timeline |
| UniCredit SpA |
| Erbud SA |
UniCredit SpA and Erbud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UniCredit SpA and Erbud SA
The main advantage of trading using opposite UniCredit SpA and Erbud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UniCredit SpA position performs unexpectedly, Erbud SA 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 Erbud SA will offset losses from the drop in Erbud SA's long position.| UniCredit SpA vs. Gamedust SA | UniCredit SpA vs. Mercator Medical SA | UniCredit SpA vs. Ultimate Games SA | UniCredit SpA vs. Quantum Software SA |
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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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