Correlation Between Freedom Bank and Intesa Sanpaolo

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

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

Diversification Opportunities for Freedom Bank and Intesa Sanpaolo

-0.39

Correlation Coefficient

Freedom Bank  Intesa Sanpaolo

Very good diversification

The 3 months correlation between Freedom and Intesa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of 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 Freedom Bank 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 Freedom Bank of 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 Freedom Bank i.e., Freedom Bank and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between Freedom Bank and Intesa Sanpaolo

Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Intesa Sanpaolo. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 2.12 times less risky than Intesa Sanpaolo. The otc stock trades about -0.08 of its potential returns per unit of risk. The Intesa Sanpaolo SpA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  2,419  in Intesa Sanpaolo SpA on December 28, 2024 and sell it today you would earn a total of  709.00  from holding Intesa Sanpaolo SpA or generate 29.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Freedom Bank of  vs.  Intesa Sanpaolo SpA

Freedom Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 21 (%) 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 Freedom Bank and Intesa Sanpaolo

The main advantage of trading using opposite Freedom Bank and Intesa Sanpaolo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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 Freedom Bank of 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.