Correlation Between Metro Bank and FinecoBank SpA

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

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

Diversification Opportunities for Metro Bank and FinecoBank SpA

-0.06

Correlation Coefficient

Metro Bank  FinecoBank SpA

Good diversification

The 3 months correlation between Metro and FinecoBank is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Metro Bank PLC and FinecoBank SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinecoBank SpA and Metro 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 Metro Bank PLC are associated (or correlated) with FinecoBank SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinecoBank SpA has no effect on the direction of Metro Bank i.e., Metro Bank and FinecoBank SpA go up and down completely randomly.

Pair Corralation between Metro Bank and FinecoBank SpA

Assuming the 90 days trading horizon Metro Bank PLC is expected to under-perform the FinecoBank SpA. In addition to that, Metro Bank is 1.65 times more volatile than FinecoBank SpA. It trades about -0.02 of its total potential returns per unit of risk. FinecoBank SpA is currently generating about 0.11 per unit of volatility. If you would invest  1,658  in FinecoBank SpA on December 24, 2024 and sell it today you would earn a total of  192.00  from holding FinecoBank SpA or generate 11.58% return on investment over 90 days.

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

Metro Bank PLC  vs.  FinecoBank SpA

Metro Bank PLC

Risk-Adjusted Performance

Very Weak

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

FinecoBank SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FinecoBank SpA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FinecoBank SpA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Metro Bank and FinecoBank SpA

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

The idea behind Metro Bank PLC and FinecoBank 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.