Correlation Between UNICREDIT SPA and ALERUS FINANCIAL

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

By analyzing existing cross correlation between UNICREDIT SPA ADR and ALERUS FINANCIAL PDL1, you can compare the effects of market volatilities on UNICREDIT SPA and ALERUS FINANCIAL 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 ALERUS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNICREDIT SPA and ALERUS FINANCIAL.

Diversification Opportunities for UNICREDIT SPA and ALERUS FINANCIAL

0.83

Correlation Coefficient

UNICREDIT SPA  ALERUS FINANCIAL

Very poor diversification

The 3 months correlation between UNICREDIT and ALERUS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding UNICREDIT SPA ADR and ALERUS FINANCIAL PDL1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERUS FINANCIAL PDL1 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 ADR are associated (or correlated) with ALERUS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERUS FINANCIAL PDL1 has no effect on the direction of UNICREDIT SPA i.e., UNICREDIT SPA and ALERUS FINANCIAL go up and down completely randomly.

Pair Corralation between UNICREDIT SPA and ALERUS FINANCIAL

Assuming the 90 days trading horizon UNICREDIT SPA is expected to generate 1.56 times less return on investment than ALERUS FINANCIAL. But when comparing it to its historical volatility, UNICREDIT SPA ADR is 1.86 times less risky than ALERUS FINANCIAL. It trades about 0.21 of its potential returns per unit of risk. ALERUS FINANCIAL PDL1 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,276  in ALERUS FINANCIAL PDL1 on April 21, 2025 and sell it today you would earn a total of  474.00  from holding ALERUS FINANCIAL PDL1 or generate 37.15% return on investment over 90 days.

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

UNICREDIT SPA ADR  vs.  ALERUS FINANCIAL PDL1

UNICREDIT SPA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UNICREDIT SPA ADR are ranked lower than 16 (%) 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.

ALERUS FINANCIAL PDL1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALERUS FINANCIAL PDL1 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALERUS FINANCIAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNICREDIT SPA and ALERUS FINANCIAL

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

The idea behind UNICREDIT SPA ADR and ALERUS FINANCIAL PDL1 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.