Correlation Between UniCredit SpA and Carlson Investments

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

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

Diversification Opportunities for UniCredit SpA and Carlson Investments

-0.75

Correlation Coefficient

UniCredit SpA  Carlson Investments

Pay attention - limited upside

The 3 months correlation between UniCredit and Carlson is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Carlson Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlson Investments 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 Carlson Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlson Investments has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Carlson Investments go up and down completely randomly.

Pair Corralation between UniCredit SpA and Carlson Investments

Assuming the 90 days trading horizon UniCredit SpA is expected to generate 0.6 times more return on investment than Carlson Investments. However, UniCredit SpA is 1.67 times less risky than Carlson Investments. It trades about 0.02 of its potential returns per unit of risk. Carlson Investments SA is currently generating about -0.07 per unit of risk. If you would invest  15,498  in UniCredit SpA on September 4, 2024 and sell it today you would earn a total of  164.00  from holding UniCredit SpA or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

UniCredit SpA  vs.  Carlson Investments SA

UniCredit SpA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, UniCredit SpA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with UniCredit SpA and Carlson Investments

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

The idea behind UniCredit SpA and Carlson Investments 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.