Correlation Between Gruppo Mutuionline and Varta AG

Can any of the company-specific risk be diversified away by investing in both Gruppo Mutuionline and Varta AG 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 Gruppo Mutuionline and Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gruppo Mutuionline and Varta AG

0.07

Correlation Coefficient

Gruppo Mutuionline  Varta AG

Significant diversification

The 3 months correlation between Gruppo and Varta is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Gruppo Mutuionline SpA and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG and Gruppo Mutuionline 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 Gruppo Mutuionline SpA are associated (or correlated) with Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Gruppo Mutuionline i.e., Gruppo Mutuionline and Varta AG go up and down completely randomly.

Pair Corralation between Gruppo Mutuionline and Varta AG

Assuming the 90 days trading horizon Gruppo Mutuionline SpA is expected to under-perform the Varta AG. But the stock apears to be less risky and, when comparing its historical volatility, Gruppo Mutuionline SpA is 8.68 times less risky than Varta AG. The stock trades about -0.02 of its potential returns per unit of risk. The Varta AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Varta AG on December 21, 2024 and sell it today you would lose (30.00) from holding Varta AG or give up 19.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

Gruppo Mutuionline SpA  vs.  Varta AG

Gruppo Mutuionline SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gruppo Mutuionline SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gruppo Mutuionline is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Varta AG

Risk-Adjusted Performance

Insignificant

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Varta AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gruppo Mutuionline and Varta AG

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

The idea behind Gruppo Mutuionline SpA and Varta AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.