Correlation Between UniCredit SpA and Bank Millennium

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

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

Diversification Opportunities for UniCredit SpA and Bank Millennium

-0.46

Correlation Coefficient

UniCredit SpA  Bank Millennium

Very good diversification

The 3 months correlation between UniCredit and Bank is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium SA 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 Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Bank Millennium go up and down completely randomly.

Pair Corralation between UniCredit SpA and Bank Millennium

Assuming the 90 days trading horizon UniCredit SpA is expected to generate 0.93 times more return on investment than Bank Millennium. However, UniCredit SpA is 1.07 times less risky than Bank Millennium. It trades about 0.0 of its potential returns per unit of risk. Bank Millennium SA is currently generating about -0.07 per unit of risk. If you would invest  15,573  in UniCredit SpA on August 30, 2024 and sell it today you would lose (147.00) from holding UniCredit SpA or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

UniCredit SpA  vs.  Bank Millennium SA

UniCredit SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UniCredit SpA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Bank Millennium SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Millennium SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with UniCredit SpA and Bank Millennium

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

The idea behind UniCredit SpA and Bank Millennium 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.