Correlation Between Barloworld and Intesa Sanpaolo

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

By analyzing existing cross correlation between Barloworld Ltd ADR and Intesa Sanpaolo SpA, you can compare the effects of market volatilities on Barloworld and Intesa Sanpaolo 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 Barloworld with a short position of Intesa Sanpaolo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Intesa Sanpaolo.

Diversification Opportunities for Barloworld and Intesa Sanpaolo

0.2

Correlation Coefficient

Barloworld  Intesa Sanpaolo

Modest diversification

The 3 months correlation between Barloworld and Intesa is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Intesa Sanpaolo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intesa Sanpaolo SpA and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Intesa Sanpaolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intesa Sanpaolo SpA has no effect on the direction of Barloworld i.e., Barloworld and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between Barloworld and Intesa Sanpaolo

Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Intesa Sanpaolo. In addition to that, Barloworld is 3.63 times more volatile than Intesa Sanpaolo SpA. It trades about -0.04 of its total potential returns per unit of risk. Intesa Sanpaolo SpA is currently generating about 0.32 per unit of volatility. If you would invest  2,356  in Intesa Sanpaolo SpA on December 4, 2024 and sell it today you would earn a total of  636.00  from holding Intesa Sanpaolo SpA or generate 26.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.27%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Intesa Sanpaolo SpA

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Intesa Sanpaolo SpA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Intesa Sanpaolo SpA are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intesa Sanpaolo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barloworld and Intesa Sanpaolo

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

The idea behind Barloworld Ltd ADR and Intesa Sanpaolo 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.