Correlation Between CAIXABANK UNADR and UNICREDIT SPA

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Can any of the company-specific risk be diversified away by investing in both CAIXABANK UNADR 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 CAIXABANK UNADR and UNICREDIT SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIXABANK UNADR 13 and UNICREDIT SPA ADR, you can compare the effects of market volatilities on CAIXABANK UNADR 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 CAIXABANK UNADR with a short position of UNICREDIT SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIXABANK UNADR and UNICREDIT SPA.

Diversification Opportunities for CAIXABANK UNADR and UNICREDIT SPA

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CAIXABANK and UNICREDIT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CAIXABANK UNADR 13 and UNICREDIT SPA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNICREDIT SPA ADR and CAIXABANK UNADR 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 CAIXABANK UNADR 13 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 ADR has no effect on the direction of CAIXABANK UNADR i.e., CAIXABANK UNADR and UNICREDIT SPA go up and down completely randomly.

Pair Corralation between CAIXABANK UNADR and UNICREDIT SPA

Assuming the 90 days trading horizon CAIXABANK UNADR 13 is expected to under-perform the UNICREDIT SPA. But the stock apears to be less risky and, when comparing its historical volatility, CAIXABANK UNADR 13 is 1.03 times less risky than UNICREDIT SPA. The stock trades about -0.03 of its potential returns per unit of risk. The UNICREDIT SPA ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,774  in UNICREDIT SPA ADR on September 24, 2024 and sell it today you would earn a total of  76.00  from holding UNICREDIT SPA ADR or generate 4.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

CAIXABANK UNADR 13  vs.  UNICREDIT SPA ADR

 Performance 
       Timeline  
CAIXABANK UNADR 13 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CAIXABANK UNADR 13 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CAIXABANK UNADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
UNICREDIT SPA ADR 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in UNICREDIT SPA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, UNICREDIT SPA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CAIXABANK UNADR and UNICREDIT SPA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CAIXABANK UNADR and UNICREDIT SPA

The main advantage of trading using opposite CAIXABANK UNADR and UNICREDIT SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIXABANK UNADR 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 CAIXABANK UNADR 13 and UNICREDIT SPA ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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