Correlation Between UNICREDIT SPA and CAIRN HOMES
Can any of the company-specific risk be diversified away by investing in both UNICREDIT SPA and CAIRN HOMES 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 CAIRN HOMES 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 CAIRN HOMES EO, you can compare the effects of market volatilities on UNICREDIT SPA and CAIRN HOMES 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 CAIRN HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNICREDIT SPA and CAIRN HOMES.
Diversification Opportunities for UNICREDIT SPA and CAIRN HOMES
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNICREDIT and CAIRN is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding UNICREDIT SPA ADR and CAIRN HOMES EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIRN HOMES EO 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 CAIRN HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIRN HOMES EO has no effect on the direction of UNICREDIT SPA i.e., UNICREDIT SPA and CAIRN HOMES go up and down completely randomly.
Pair Corralation between UNICREDIT SPA and CAIRN HOMES
Assuming the 90 days trading horizon UNICREDIT SPA is expected to generate 1.07 times less return on investment than CAIRN HOMES. But when comparing it to its historical volatility, UNICREDIT SPA ADR is 1.27 times less risky than CAIRN HOMES. It trades about 0.21 of its potential returns per unit of risk. CAIRN HOMES EO is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 181.00 in CAIRN HOMES EO on April 20, 2025 and sell it today you would earn a total of 45.00 from holding CAIRN HOMES EO or generate 24.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
UNICREDIT SPA ADR vs. CAIRN HOMES EO
Performance |
Timeline |
UNICREDIT SPA ADR |
CAIRN HOMES EO |
UNICREDIT SPA and CAIRN HOMES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UNICREDIT SPA and CAIRN HOMES
The main advantage of trading using opposite UNICREDIT SPA and CAIRN HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNICREDIT SPA position performs unexpectedly, CAIRN HOMES 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 CAIRN HOMES will offset losses from the drop in CAIRN HOMES's long position.UNICREDIT SPA vs. COMBA TELECOM SYST | UNICREDIT SPA vs. STORE ELECTRONIC | UNICREDIT SPA vs. Nucletron Electronic Aktiengesellschaft | UNICREDIT SPA vs. CITIC Telecom International |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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