Correlation Between Intesa Sanpaolo and VP Bank

Can any of the company-specific risk be diversified away by investing in both Intesa Sanpaolo and VP Bank 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 Intesa Sanpaolo and VP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intesa Sanpaolo SpA and VP Bank AG, you can compare the effects of market volatilities on Intesa Sanpaolo and VP Bank 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 Intesa Sanpaolo with a short position of VP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intesa Sanpaolo and VP Bank.

Diversification Opportunities for Intesa Sanpaolo and VP Bank

-0.44

Correlation Coefficient

Intesa Sanpaolo  VP Bank

Very good diversification

The 3 months correlation between Intesa and 3VFN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Intesa Sanpaolo SpA and VP Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VP Bank AG and Intesa Sanpaolo 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 Intesa Sanpaolo SpA are associated (or correlated) with VP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VP Bank AG has no effect on the direction of Intesa Sanpaolo i.e., Intesa Sanpaolo and VP Bank go up and down completely randomly.

Pair Corralation between Intesa Sanpaolo and VP Bank

Assuming the 90 days horizon Intesa Sanpaolo SpA is expected to generate 0.77 times more return on investment than VP Bank. However, Intesa Sanpaolo SpA is 1.29 times less risky than VP Bank. It trades about 0.01 of its potential returns per unit of risk. VP Bank AG is currently generating about 0.0 per unit of risk. If you would invest  358.00  in Intesa Sanpaolo SpA on September 2, 2024 and sell it today you would earn a total of  1.00  from holding Intesa Sanpaolo SpA or generate 0.28% return on investment over 90 days.

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

Intesa Sanpaolo SpA  vs.  VP Bank AG

Intesa Sanpaolo SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intesa Sanpaolo SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intesa Sanpaolo is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

VP Bank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VP Bank AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, VP Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intesa Sanpaolo and VP Bank

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

The idea behind Intesa Sanpaolo SpA and VP Bank AG 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..