Correlation Between KBC Group and UniCredit SpA

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

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

Diversification Opportunities for KBC Group and UniCredit SpA

0.93

Correlation Coefficient

KBC Group  UniCredit SpA

Almost no diversification

The 3 months correlation between KBC and UniCredit is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding KBC Group NV and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and KBC Group 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 KBC Group NV 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 KBC Group i.e., KBC Group and UniCredit SpA go up and down completely randomly.

Pair Corralation between KBC Group and UniCredit SpA

Assuming the 90 days horizon KBC Group is expected to generate 1.14 times less return on investment than UniCredit SpA. But when comparing it to its historical volatility, KBC Group NV is 1.34 times less risky than UniCredit SpA. It trades about 0.19 of its potential returns per unit of risk. UniCredit SpA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,860  in UniCredit SpA on April 20, 2025 and sell it today you would earn a total of  925.00  from holding UniCredit SpA or generate 19.03% return on investment over 90 days.

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

KBC Group NV  vs.  UniCredit SpA

KBC Group NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Group NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KBC Group reported solid returns over the last few months and may actually be approaching a breakup point.

UniCredit SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 12 (%) 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 KBC Group and UniCredit SpA

The main advantage of trading using opposite KBC Group and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Group 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 KBC Group NV 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.