Correlation Between Inter Cars and UniCredit SpA

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

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

Diversification Opportunities for Inter Cars and UniCredit SpA

-0.33

Correlation Coefficient

Inter Cars  UniCredit SpA

Very good diversification

The 3 months correlation between Inter and UniCredit is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Inter Cars SA and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and Inter Cars 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 Inter Cars SA 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 Inter Cars i.e., Inter Cars and UniCredit SpA go up and down completely randomly.

Pair Corralation between Inter Cars and UniCredit SpA

Assuming the 90 days trading horizon Inter Cars SA is expected to generate 0.8 times more return on investment than UniCredit SpA. However, Inter Cars SA is 1.25 times less risky than UniCredit SpA. It trades about 0.14 of its potential returns per unit of risk. UniCredit SpA is currently generating about -0.09 per unit of risk. If you would invest  49,350  in Inter Cars SA on September 12, 2024 and sell it today you would earn a total of  2,550  from holding Inter Cars SA or generate 5.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

Inter Cars SA  vs.  UniCredit SpA

Inter Cars SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Cars SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Inter Cars is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

UniCredit SpA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, UniCredit SpA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inter Cars and UniCredit SpA

The main advantage of trading using opposite Inter Cars and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Cars 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 Inter Cars SA 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..