Correlation Between Poste Italiane and WIMFARM SA

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

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

Diversification Opportunities for Poste Italiane and WIMFARM SA

0.36

Correlation Coefficient

Poste Italiane  WIMFARM SA

Weak diversification

The 3 months correlation between Poste and WIMFARM is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Poste Italiane SpA and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO and Poste Italiane 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 Poste Italiane SpA are associated (or correlated) with WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Poste Italiane i.e., Poste Italiane and WIMFARM SA go up and down completely randomly.

Pair Corralation between Poste Italiane and WIMFARM SA

Assuming the 90 days horizon Poste Italiane SpA is expected to generate 0.17 times more return on investment than WIMFARM SA. However, Poste Italiane SpA is 5.91 times less risky than WIMFARM SA. It trades about 0.36 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about 0.03 per unit of risk. If you would invest  1,354  in Poste Italiane SpA on December 29, 2024 and sell it today you would earn a total of  291.00  from holding Poste Italiane SpA or generate 21.49% return on investment over 90 days.

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

Poste Italiane SpA  vs.  WIMFARM SA EO

Poste Italiane SpA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Poste Italiane reported solid returns over the last few months and may actually be approaching a breakup point.

WIMFARM SA EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Poste Italiane and WIMFARM SA

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

The idea behind Poste Italiane SpA and WIMFARM SA EO 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.