Correlation Between Acerinox and Ferrovial
Can any of the company-specific risk be diversified away by investing in both Acerinox and Ferrovial 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 Acerinox and Ferrovial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acerinox and Ferrovial SA, you can compare the effects of market volatilities on Acerinox and Ferrovial 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 Acerinox with a short position of Ferrovial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acerinox and Ferrovial.
Diversification Opportunities for Acerinox and Ferrovial
Poor diversification
The 3 months correlation between Acerinox and Ferrovial is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Acerinox and Ferrovial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SA and Acerinox 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 Acerinox are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SA has no effect on the direction of Acerinox i.e., Acerinox and Ferrovial go up and down completely randomly.
Pair Corralation between Acerinox and Ferrovial
Assuming the 90 days trading horizon Acerinox is expected to generate 15.63 times less return on investment than Ferrovial. In addition to that, Acerinox is 1.2 times more volatile than Ferrovial SA. It trades about 0.0 of its total potential returns per unit of risk. Ferrovial SA is currently generating about 0.06 per unit of volatility. If you would invest 3,488 in Ferrovial SA on November 3, 2024 and sell it today you would earn a total of 652.00 from holding Ferrovial SA or generate 18.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acerinox vs. Ferrovial SA
Performance |
| Timeline |
| Acerinox |
| Ferrovial SA |
Acerinox and Ferrovial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acerinox and Ferrovial
The main advantage of trading using opposite Acerinox and Ferrovial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acerinox position performs unexpectedly, Ferrovial 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 Ferrovial will offset losses from the drop in Ferrovial's long position.| Acerinox vs. ACS Actividades de | Acerinox vs. ArcelorMittal SA | Acerinox vs. Mapfre | Acerinox vs. Ferrovial SA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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