Correlation Between Azimut Holding and Western Asset

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

By analyzing existing cross correlation between Azimut Holding SpA and Western Asset High, you can compare the effects of market volatilities on Azimut Holding and Western Asset 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 Azimut Holding with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azimut Holding and Western Asset.

Diversification Opportunities for Azimut Holding and Western Asset

0.29

Correlation Coefficient

Azimut Holding  Western Asset

Modest diversification

The 3 months correlation between Azimut and Western is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Azimut Holding SpA and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Azimut Holding 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 Azimut Holding SpA are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of Azimut Holding i.e., Azimut Holding and Western Asset go up and down completely randomly.

Pair Corralation between Azimut Holding and Western Asset

Assuming the 90 days horizon Azimut Holding SpA is expected to generate 5.14 times more return on investment than Western Asset. However, Azimut Holding is 5.14 times more volatile than Western Asset High. It trades about 0.09 of its potential returns per unit of risk. Western Asset High is currently generating about 0.08 per unit of risk. If you would invest  2,307  in Azimut Holding SpA on September 12, 2024 and sell it today you would earn a total of  370.00  from holding Azimut Holding SpA or generate 16.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Azimut Holding SpA  vs.  Western Asset High

Azimut Holding SpA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Azimut Holding SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Azimut Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Western Asset High

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Azimut Holding and Western Asset

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

The idea behind Azimut Holding SpA and Western Asset High 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.