Correlation Between Carnegie Clean and Intesa Sanpaolo

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

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

Diversification Opportunities for Carnegie Clean and Intesa Sanpaolo

-0.21

Correlation Coefficient

Carnegie Clean  Intesa Sanpaolo

Very good diversification

The 3 months correlation between Carnegie and Intesa is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy 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 Carnegie Clean 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 Carnegie Clean Energy 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 Carnegie Clean i.e., Carnegie Clean and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between Carnegie Clean and Intesa Sanpaolo

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the Intesa Sanpaolo. In addition to that, Carnegie Clean is 4.18 times more volatile than Intesa Sanpaolo SpA. It trades about -0.01 of its total potential returns per unit of risk. Intesa Sanpaolo SpA is currently generating about 0.33 per unit of volatility. If you would invest  382.00  in Intesa Sanpaolo SpA on December 22, 2024 and sell it today you would earn a total of  105.00  from holding Intesa Sanpaolo SpA or generate 27.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Carnegie Clean Energy  vs.  Intesa Sanpaolo SpA

Carnegie Clean Energy

Risk-Adjusted Performance

Very Weak

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

Intesa Sanpaolo SpA

Risk-Adjusted Performance

Solid

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. Despite nearly fragile basic indicators, Intesa Sanpaolo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnegie Clean and Intesa Sanpaolo

The main advantage of trading using opposite Carnegie Clean and Intesa Sanpaolo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean 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 Carnegie Clean Energy 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.