Correlation Between European Equity and Azimut Holding

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

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

Diversification Opportunities for European Equity and Azimut Holding

-0.31

Correlation Coefficient

European Equity  Azimut Holding

Very good diversification

The 3 months correlation between European and Azimut is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and Azimut Holding SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Holding SpA and European Equity 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 European Equity Closed are associated (or correlated) with Azimut Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Holding SpA has no effect on the direction of European Equity i.e., European Equity and Azimut Holding go up and down completely randomly.

Pair Corralation between European Equity and Azimut Holding

Considering the 90-day investment horizon European Equity Closed is expected to under-perform the Azimut Holding. But the fund apears to be less risky and, when comparing its historical volatility, European Equity Closed is 3.35 times less risky than Azimut Holding. The fund trades about -0.08 of its potential returns per unit of risk. The Azimut Holding SpA is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

European Equity Closed  vs.  Azimut Holding SpA

European Equity Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Equity Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, European Equity is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with European Equity and Azimut Holding

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

The idea behind European Equity Closed and Azimut Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.