Correlation Between WIMFARM SA and Poste Italiane

Can any of the company-specific risk be diversified away by investing in both WIMFARM SA and Poste Italiane 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 WIMFARM SA and Poste Italiane into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WIMFARM SA EO and Poste Italiane SpA, you can compare the effects of market volatilities on WIMFARM SA and Poste Italiane 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 WIMFARM SA with a short position of Poste Italiane. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and Poste Italiane.

Diversification Opportunities for WIMFARM SA and Poste Italiane

0.56

Correlation Coefficient

WIMFARM SA  Poste Italiane

Very weak diversification

The 3 months correlation between WIMFARM and Poste is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and Poste Italiane SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poste Italiane SpA and WIMFARM SA 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 WIMFARM SA EO are associated (or correlated) with Poste Italiane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poste Italiane SpA has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and Poste Italiane go up and down completely randomly.

Pair Corralation between WIMFARM SA and Poste Italiane

Assuming the 90 days horizon WIMFARM SA is expected to generate 1.15 times less return on investment than Poste Italiane. In addition to that, WIMFARM SA is 4.44 times more volatile than Poste Italiane SpA. It trades about 0.04 of its total potential returns per unit of risk. Poste Italiane SpA is currently generating about 0.22 per unit of volatility. If you would invest  1,269  in Poste Italiane SpA on October 24, 2024 and sell it today you would earn a total of  160.00  from holding Poste Italiane SpA or generate 12.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

WIMFARM SA EO  vs.  Poste Italiane SpA

WIMFARM SA EO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Poste Italiane SpA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Poste Italiane unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WIMFARM SA and Poste Italiane

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

The idea behind WIMFARM SA EO and Poste Italiane 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.