Correlation Between UniCredit SpA and Farmers
Can any of the company-specific risk be diversified away by investing in both UniCredit SpA and Farmers 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 Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UniCredit SpA ADR and Farmers And Merchants, you can compare the effects of market volatilities on UniCredit SpA and Farmers 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 Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of UniCredit SpA and Farmers.
Diversification Opportunities for UniCredit SpA and Farmers
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UniCredit and Farmers is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA ADR and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants 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 ADR are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Farmers go up and down completely randomly.
Pair Corralation between UniCredit SpA and Farmers
Assuming the 90 days horizon UniCredit SpA ADR is expected to generate 1.36 times more return on investment than Farmers. However, UniCredit SpA is 1.36 times more volatile than Farmers And Merchants. It trades about 0.1 of its potential returns per unit of risk. Farmers And Merchants is currently generating about -0.02 per unit of risk. If you would invest 863.00 in UniCredit SpA ADR on August 27, 2024 and sell it today you would earn a total of 1,138 from holding UniCredit SpA ADR or generate 131.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.9% |
| Values | Daily Returns |
UniCredit SpA ADR vs. Farmers And Merchants
Performance |
| Timeline |
| UniCredit SpA ADR |
| Farmers And Merchants |
UniCredit SpA and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UniCredit SpA and Farmers
The main advantage of trading using opposite UniCredit SpA and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UniCredit SpA position performs unexpectedly, Farmers 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 Farmers will offset losses from the drop in Farmers' long position.The idea behind UniCredit SpA ADR and Farmers And Merchants 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.| Farmers vs. First National Bank | Farmers vs. Farmers Merchants Bancorp | Farmers vs. Exchange Bank | Farmers vs. First National of |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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