Correlation Between UNICREDIT SPA and CAIXABANK UNADR

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

By analyzing existing cross correlation between UNICREDIT SPA ADR and CAIXABANK UNADR 13, you can compare the effects of market volatilities on UNICREDIT SPA and CAIXABANK UNADR 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 CAIXABANK UNADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNICREDIT SPA and CAIXABANK UNADR.

Diversification Opportunities for UNICREDIT SPA and CAIXABANK UNADR

0.96

Correlation Coefficient

UNICREDIT SPA  CAIXABANK UNADR

Almost no diversification

The 3 months correlation between UNICREDIT and CAIXABANK is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding UNICREDIT SPA ADR and CAIXABANK UNADR 13 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIXABANK UNADR 13 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 ADR are associated (or correlated) with CAIXABANK UNADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIXABANK UNADR 13 has no effect on the direction of UNICREDIT SPA i.e., UNICREDIT SPA and CAIXABANK UNADR go up and down completely randomly.

Pair Corralation between UNICREDIT SPA and CAIXABANK UNADR

Assuming the 90 days trading horizon UNICREDIT SPA is expected to generate 1.26 times less return on investment than CAIXABANK UNADR. In addition to that, UNICREDIT SPA is 1.03 times more volatile than CAIXABANK UNADR 13. It trades about 0.28 of its total potential returns per unit of risk. CAIXABANK UNADR 13 is currently generating about 0.36 per unit of volatility. If you would invest  159.00  in CAIXABANK UNADR 13 on December 29, 2024 and sell it today you would earn a total of  81.00  from holding CAIXABANK UNADR 13 or generate 50.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

UNICREDIT SPA ADR  vs.  CAIXABANK UNADR 13

UNICREDIT SPA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UNICREDIT SPA ADR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UNICREDIT SPA reported solid returns over the last few months and may actually be approaching a breakup point.

CAIXABANK UNADR 13

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CAIXABANK UNADR 13 are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CAIXABANK UNADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNICREDIT SPA and CAIXABANK UNADR

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

The idea behind UNICREDIT SPA ADR and CAIXABANK UNADR 13 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.