Correlation Between UniCredit SpA and Crdit Agricole

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

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

Diversification Opportunities for UniCredit SpA and Crdit Agricole

0.22

Correlation Coefficient

UniCredit SpA  Crdit Agricole

Modest diversification

The 3 months correlation between UniCredit and Crdit is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA and UniCredit SpA 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 UniCredit SpA are associated (or correlated) with Crdit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Crdit Agricole go up and down completely randomly.

Pair Corralation between UniCredit SpA and Crdit Agricole

Assuming the 90 days trading horizon UniCredit SpA is expected to generate 1.2 times more return on investment than Crdit Agricole. However, UniCredit SpA is 1.2 times more volatile than Crdit Agricole SA. It trades about 0.13 of its potential returns per unit of risk. Crdit Agricole SA is currently generating about 0.03 per unit of risk. If you would invest  2,267  in UniCredit SpA on September 18, 2024 and sell it today you would earn a total of  1,626  from holding UniCredit SpA or generate 71.72% return on investment over 90 days.

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

UniCredit SpA  vs.  Crdit Agricole SA

UniCredit SpA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UniCredit SpA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Crdit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with UniCredit SpA and Crdit Agricole

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

The idea behind UniCredit SpA and Crdit Agricole SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.