Correlation Between Azimut Holding and Westwood Holdings

Can any of the company-specific risk be diversified away by investing in both Azimut Holding and Westwood Holdings 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 Azimut Holding and Westwood Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Azimut Holding and Westwood Holdings

0.36

Correlation Coefficient

Azimut Holding  Westwood Holdings

Weak diversification

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

Pair Corralation between Azimut Holding and Westwood Holdings

Assuming the 90 days horizon Azimut Holding SpA is expected to under-perform the Westwood Holdings. In addition to that, Azimut Holding is 1.46 times more volatile than Westwood Holdings Group. It trades about -0.07 of its total potential returns per unit of risk. Westwood Holdings Group is currently generating about 0.07 per unit of volatility. If you would invest  1,549  in Westwood Holdings Group on August 31, 2024 and sell it today you would earn a total of  50.00  from holding Westwood Holdings Group or generate 3.23% return on investment over 90 days.

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

Azimut Holding SpA  vs.  Westwood Holdings Group

Azimut Holding SpA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Westwood Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Holdings Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Westwood Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azimut Holding and Westwood Holdings

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

The idea behind Azimut Holding SpA and Westwood Holdings Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.