Correlation Between UniCredit SpA and Notoria

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

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

Diversification Opportunities for UniCredit SpA and Notoria

-0.28

Correlation Coefficient

UniCredit SpA  Notoria

Very good diversification

The 3 months correlation between UniCredit and Notoria is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Notoria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Notoria 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 Notoria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Notoria has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Notoria go up and down completely randomly.

Pair Corralation between UniCredit SpA and Notoria

Assuming the 90 days trading horizon UniCredit SpA is expected to generate 0.93 times more return on investment than Notoria. However, UniCredit SpA is 1.07 times less risky than Notoria. It trades about 0.08 of its potential returns per unit of risk. Notoria is currently generating about 0.03 per unit of risk. If you would invest  6,237  in UniCredit SpA on October 11, 2024 and sell it today you would earn a total of  10,933  from holding UniCredit SpA or generate 175.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.7%
Values	Daily Returns

UniCredit SpA  vs.  Notoria

UniCredit SpA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 2 (%) 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.

Notoria

Risk-Adjusted Performance

0 of 100

Solid

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

Pair Trading with UniCredit SpA and Notoria

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

The idea behind UniCredit SpA and Notoria 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.