Correlation Between ASPEN TECHINC and Intesa Sanpaolo

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

By analyzing existing cross correlation between ASPEN TECHINC DL and Intesa Sanpaolo SpA, you can compare the effects of market volatilities on ASPEN TECHINC and Intesa Sanpaolo 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 ASPEN TECHINC with a short position of Intesa Sanpaolo. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Intesa Sanpaolo.

Diversification Opportunities for ASPEN TECHINC and Intesa Sanpaolo

0.23

Correlation Coefficient

ASPEN TECHINC  Intesa Sanpaolo

Modest diversification

The 3 months correlation between ASPEN and Intesa is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and Intesa Sanpaolo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intesa Sanpaolo SpA and ASPEN TECHINC 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 ASPEN TECHINC DL are associated (or correlated) with Intesa Sanpaolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intesa Sanpaolo SpA has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between ASPEN TECHINC and Intesa Sanpaolo

Assuming the 90 days horizon ASPEN TECHINC is expected to generate 12.35 times less return on investment than Intesa Sanpaolo. But when comparing it to its historical volatility, ASPEN TECHINC DL is 1.1 times less risky than Intesa Sanpaolo. It trades about 0.03 of its potential returns per unit of risk. Intesa Sanpaolo SpA is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  380.00  in Intesa Sanpaolo SpA on December 20, 2024 and sell it today you would earn a total of  114.00  from holding Intesa Sanpaolo SpA or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.22%
Values	Daily Returns

ASPEN TECHINC DL  vs.  Intesa Sanpaolo SpA

ASPEN TECHINC DL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ASPEN TECHINC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Intesa Sanpaolo SpA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Intesa Sanpaolo SpA are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Intesa Sanpaolo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASPEN TECHINC and Intesa Sanpaolo

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

The idea behind ASPEN TECHINC DL and Intesa Sanpaolo 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.