Correlation Between UniCredit SpA and Izolacja Jarocin

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

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

Diversification Opportunities for UniCredit SpA and Izolacja Jarocin

0.89

Correlation Coefficient

UniCredit SpA  Izolacja Jarocin

Very poor diversification

The 3 months correlation between UniCredit and Izolacja is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Izolacja Jarocin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izolacja Jarocin 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 Izolacja Jarocin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izolacja Jarocin has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Izolacja Jarocin go up and down completely randomly.

Pair Corralation between UniCredit SpA and Izolacja Jarocin

Assuming the 90 days trading horizon UniCredit SpA is expected to generate 0.56 times more return on investment than Izolacja Jarocin. However, UniCredit SpA is 1.79 times less risky than Izolacja Jarocin. It trades about 0.29 of its potential returns per unit of risk. Izolacja Jarocin SA is currently generating about 0.11 per unit of risk. If you would invest  15,662  in UniCredit SpA on December 2, 2024 and sell it today you would earn a total of  5,398  from holding UniCredit SpA or generate 34.47% return on investment over 90 days.

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

UniCredit SpA  vs.  Izolacja Jarocin SA

UniCredit SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, UniCredit SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Izolacja Jarocin

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Izolacja Jarocin SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Izolacja Jarocin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UniCredit SpA and Izolacja Jarocin

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

The idea behind UniCredit SpA and Izolacja Jarocin 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.