Correlation Between UniCredit SpA and HM Inwest
Can any of the company-specific risk be diversified away by investing in both UniCredit SpA and HM Inwest 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 HM Inwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UniCredit SpA and HM Inwest SA, you can compare the effects of market volatilities on UniCredit SpA and HM Inwest 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 HM Inwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of UniCredit SpA and HM Inwest.
Diversification Opportunities for UniCredit SpA and HM Inwest
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UniCredit and HMI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and HM Inwest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HM Inwest 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 HM Inwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HM Inwest SA has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and HM Inwest go up and down completely randomly.
Pair Corralation between UniCredit SpA and HM Inwest
Assuming the 90 days trading horizon UniCredit SpA is expected to generate 1.35 times less return on investment than HM Inwest. In addition to that, UniCredit SpA is 1.1 times more volatile than HM Inwest SA. It trades about 0.07 of its total potential returns per unit of risk. HM Inwest SA is currently generating about 0.11 per unit of volatility. If you would invest 828.00 in HM Inwest SA on August 29, 2024 and sell it today you would earn a total of 3,992 from holding HM Inwest SA or generate 482.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.84% |
| Values | Daily Returns |
UniCredit SpA vs. HM Inwest SA
Performance |
| Timeline |
| UniCredit SpA |
| HM Inwest SA |
UniCredit SpA and HM Inwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UniCredit SpA and HM Inwest
The main advantage of trading using opposite UniCredit SpA and HM Inwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UniCredit SpA position performs unexpectedly, HM Inwest 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 HM Inwest will offset losses from the drop in HM Inwest's long position.The idea behind UniCredit SpA and HM Inwest SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HM Inwest vs. Banco Santander SA | HM Inwest vs. UniCredit SpA | HM Inwest vs. CEZ as | HM Inwest vs. Polski Koncern Naftowy |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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