Correlation Between Intesa Sanpaolo and Crédit Agricole

Can any of the company-specific risk be diversified away by investing in both Intesa Sanpaolo and Crédit Agricole 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 Crédit Agricole 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 Crdit Agricole SA, you can compare the effects of market volatilities on Intesa Sanpaolo and Crédit Agricole 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 Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intesa Sanpaolo and Crédit Agricole.

Diversification Opportunities for Intesa Sanpaolo and Crédit Agricole

0.62

Correlation Coefficient

Intesa Sanpaolo  Crédit Agricole

Poor diversification

The 3 months correlation between Intesa and Crédit is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Intesa Sanpaolo SpA and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA 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 Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Intesa Sanpaolo i.e., Intesa Sanpaolo and Crédit Agricole go up and down completely randomly.

Pair Corralation between Intesa Sanpaolo and Crédit Agricole

Assuming the 90 days horizon Intesa Sanpaolo SpA is expected to under-perform the Crédit Agricole. But the pink sheet apears to be less risky and, when comparing its historical volatility, Intesa Sanpaolo SpA is 1.28 times less risky than Crédit Agricole. The pink sheet trades about -0.39 of its potential returns per unit of risk. The Crdit Agricole SA is currently generating about -0.3 of returns per unit of risk over similar time horizon. If you would invest  1,500  in Crdit Agricole SA on September 4, 2024 and sell it today you would lose (206.00) from holding Crdit Agricole SA or give up 13.73% of portfolio value over 90 days.

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

Intesa Sanpaolo SpA  vs.  Crdit Agricole SA

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. In spite of fairly strong basic indicators, Intesa Sanpaolo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Crdit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Intesa Sanpaolo and Crédit Agricole

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

The idea behind Intesa Sanpaolo SpA and Crdit Agricole SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.