Correlation Between United States and Caltagirone SpA
Can any of the company-specific risk be diversified away by investing in both United States and Caltagirone SpA 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 United States and Caltagirone SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Caltagirone SpA, you can compare the effects of market volatilities on United States and Caltagirone SpA 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 United States with a short position of Caltagirone SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Caltagirone SpA.
Diversification Opportunities for United States and Caltagirone SpA
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Caltagirone is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Caltagirone SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caltagirone SpA and United States 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 United States Steel are associated (or correlated) with Caltagirone SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caltagirone SpA has no effect on the direction of United States i.e., United States and Caltagirone SpA go up and down completely randomly.
Pair Corralation between United States and Caltagirone SpA
Assuming the 90 days trading horizon United States is expected to generate 1.02 times less return on investment than Caltagirone SpA. But when comparing it to its historical volatility, United States Steel is 1.32 times less risky than Caltagirone SpA. It trades about 0.09 of its potential returns per unit of risk. Caltagirone SpA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 568.00 in Caltagirone SpA on September 1, 2024 and sell it today you would earn a total of 26.00 from holding Caltagirone SpA or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Caltagirone SpA
Performance |
| Timeline |
| United States Steel |
| Caltagirone SpA |
United States and Caltagirone SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Caltagirone SpA
The main advantage of trading using opposite United States and Caltagirone SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Caltagirone SpA 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 Caltagirone SpA will offset losses from the drop in Caltagirone SpA's long position.| United States vs. PT Indofood Sukses | United States vs. NIPPON MEAT PACKERS | United States vs. Food Life Companies | United States vs. Silicon Motion Technology |
| Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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