Correlation Between UniCredit SpA and Ferro SA
Can any of the company-specific risk be diversified away by investing in both UniCredit SpA and Ferro 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 Ferro 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 Ferro SA, you can compare the effects of market volatilities on UniCredit SpA and Ferro 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 Ferro SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UniCredit SpA and Ferro SA.
Diversification Opportunities for UniCredit SpA and Ferro SA
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UniCredit and Ferro is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Ferro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferro 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 Ferro SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferro SA has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Ferro SA go up and down completely randomly.
Pair Corralation between UniCredit SpA and Ferro SA
Assuming the 90 days trading horizon UniCredit SpA is expected to under-perform the Ferro SA. In addition to that, UniCredit SpA is 1.16 times more volatile than Ferro SA. It trades about -0.05 of its total potential returns per unit of risk. Ferro SA is currently generating about -0.01 per unit of volatility. If you would invest 3,440 in Ferro SA on September 14, 2024 and sell it today you would lose (30.00) from holding Ferro SA or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
UniCredit SpA vs. Ferro SA
Performance |
| Timeline |
| UniCredit SpA |
| Ferro SA |
UniCredit SpA and Ferro SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UniCredit SpA and Ferro SA
The main advantage of trading using opposite UniCredit SpA and Ferro SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UniCredit SpA position performs unexpectedly, Ferro 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 Ferro SA will offset losses from the drop in Ferro SA's long position.| UniCredit SpA vs. Santander Bank Polska | UniCredit SpA vs. Bank Polska Kasa | UniCredit SpA vs. ING Bank lski | UniCredit SpA vs. mBank SA |
| Ferro SA vs. Medicalg | Ferro SA vs. Carlson Investments SA | Ferro SA vs. Immobile | Ferro SA vs. Road Studio SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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