Correlation Between Fundamental Global and Assicurazioni Generali

Can any of the company-specific risk be diversified away by investing in both Fundamental Global and Assicurazioni Generali 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 Fundamental Global and Assicurazioni Generali into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Fundamental Global and Assicurazioni Generali

0.4

Correlation Coefficient

Fundamental Global  Assicurazioni Generali

Very weak diversification

The 3 months correlation between Fundamental and Assicurazioni is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Global and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali and Fundamental Global 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 Fundamental Global are associated (or correlated) with Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of Fundamental Global i.e., Fundamental Global and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between Fundamental Global and Assicurazioni Generali

Assuming the 90 days horizon Fundamental Global is expected to generate 11.77 times more return on investment than Assicurazioni Generali. However, Fundamental Global is 11.77 times more volatile than Assicurazioni Generali SpA. It trades about 0.11 of its potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.12 per unit of risk. If you would invest  1,529  in Fundamental Global on September 2, 2024 and sell it today you would earn a total of  271.00  from holding Fundamental Global or generate 17.72% return on investment over 90 days.

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

Fundamental Global  vs.  Assicurazioni Generali SpA

Fundamental Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Fundamental Global reported solid returns over the last few months and may actually be approaching a breakup point.

Assicurazioni Generali

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Assicurazioni Generali is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fundamental Global and Assicurazioni Generali

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

The idea behind Fundamental Global and Assicurazioni Generali 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.