Correlation Between Alphabet and UniCredit SpA

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

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

Diversification Opportunities for Alphabet and UniCredit SpA

0.82

Correlation Coefficient

Alphabet  UniCredit SpA

Very poor diversification

The 3 months correlation between Alphabet and UniCredit is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Class A and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and Alphabet 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 Alphabet Class A are associated (or correlated) with UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Alphabet i.e., Alphabet and UniCredit SpA go up and down completely randomly.

Pair Corralation between Alphabet and UniCredit SpA

Assuming the 90 days trading horizon Alphabet is expected to generate 2.54 times less return on investment than UniCredit SpA. In addition to that, Alphabet is 1.11 times more volatile than UniCredit SpA. It trades about 0.07 of its total potential returns per unit of risk. UniCredit SpA is currently generating about 0.19 per unit of volatility. If you would invest  4,677  in UniCredit SpA on April 13, 2025 and sell it today you would earn a total of  1,110  from holding UniCredit SpA or generate 23.73% return on investment over 90 days.

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

Alphabet Class A  vs.  UniCredit SpA

Alphabet Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Class A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in August 2025.

UniCredit SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UniCredit SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and UniCredit SpA

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

The idea behind Alphabet Class A and UniCredit 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.