Correlation Between Naranja Renta and Metrovacesa

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Naranja Renta and Metrovacesa 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 Naranja Renta and Metrovacesa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naranja Renta Fija and Metrovacesa SA, you can compare the effects of market volatilities on Naranja Renta and Metrovacesa 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 Naranja Renta with a short position of Metrovacesa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naranja Renta and Metrovacesa.

Diversification Opportunities for Naranja Renta and Metrovacesa

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Naranja and Metrovacesa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Naranja Renta Fija and Metrovacesa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrovacesa SA and Naranja Renta 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 Naranja Renta Fija are associated (or correlated) with Metrovacesa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrovacesa SA has no effect on the direction of Naranja Renta i.e., Naranja Renta and Metrovacesa go up and down completely randomly.

Pair Corralation between Naranja Renta and Metrovacesa

Assuming the 90 days trading horizon Naranja Renta is expected to generate 6.51 times less return on investment than Metrovacesa. But when comparing it to its historical volatility, Naranja Renta Fija is 15.52 times less risky than Metrovacesa. It trades about 0.35 of its potential returns per unit of risk. Metrovacesa SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  854.00  in Metrovacesa SA on September 12, 2024 and sell it today you would earn a total of  46.00  from holding Metrovacesa SA or generate 5.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy97.62%
ValuesDaily Returns

Naranja Renta Fija  vs.  Metrovacesa SA

 Performance 
       Timeline  
Naranja Renta Fija 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Naranja Renta Fija are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Naranja Renta is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Metrovacesa SA 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Metrovacesa SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Metrovacesa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Naranja Renta and Metrovacesa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Naranja Renta and Metrovacesa

The main advantage of trading using opposite Naranja Renta and Metrovacesa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naranja Renta position performs unexpectedly, Metrovacesa 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 Metrovacesa will offset losses from the drop in Metrovacesa's long position.
The idea behind Naranja Renta Fija and Metrovacesa 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon