Correlation Between Hollywood Bowl and UniCredit SpA

Can any of the company-specific risk be diversified away by investing in both Hollywood Bowl and UniCredit 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 Hollywood Bowl and UniCredit SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hollywood Bowl Group and UniCredit SpA, you can compare the effects of market volatilities on Hollywood Bowl and UniCredit 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 Hollywood Bowl with a short position of UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollywood Bowl and UniCredit SpA.

Diversification Opportunities for Hollywood Bowl and UniCredit SpA

-0.55

Correlation Coefficient

Hollywood Bowl  UniCredit SpA

Excellent diversification

The 3 months correlation between Hollywood and UniCredit is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and Hollywood Bowl 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 Hollywood Bowl Group are associated (or correlated) with UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and UniCredit SpA go up and down completely randomly.

Pair Corralation between Hollywood Bowl and UniCredit SpA

Assuming the 90 days horizon Hollywood Bowl Group is expected to under-perform the UniCredit SpA. In addition to that, Hollywood Bowl is 1.01 times more volatile than UniCredit SpA. It trades about -0.02 of its total potential returns per unit of risk. UniCredit SpA is currently generating about 0.29 per unit of volatility. If you would invest  3,833  in UniCredit SpA on December 24, 2024 and sell it today you would earn a total of  1,482  from holding UniCredit SpA or generate 38.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hollywood Bowl Group  vs.  UniCredit SpA

Hollywood Bowl Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hollywood Bowl Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hollywood Bowl is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UniCredit SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UniCredit SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hollywood Bowl and UniCredit SpA

The main advantage of trading using opposite Hollywood Bowl and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywood Bowl position performs unexpectedly, UniCredit 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.

The idea behind Hollywood Bowl Group and UniCredit SpA 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.