Correlation Between Aedas Homes and Mapfre
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Mapfre 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 Aedas Homes and Mapfre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SL and Mapfre, you can compare the effects of market volatilities on Aedas Homes and Mapfre 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 Aedas Homes with a short position of Mapfre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Mapfre.
Diversification Opportunities for Aedas Homes and Mapfre
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aedas and Mapfre is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SL and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Aedas Homes 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 Aedas Homes SL are associated (or correlated) with Mapfre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre has no effect on the direction of Aedas Homes i.e., Aedas Homes and Mapfre go up and down completely randomly.
Pair Corralation between Aedas Homes and Mapfre
Assuming the 90 days trading horizon Aedas Homes SL is expected to generate 1.37 times more return on investment than Mapfre. However, Aedas Homes is 1.37 times more volatile than Mapfre. It trades about 0.32 of its potential returns per unit of risk. Mapfre is currently generating about 0.27 per unit of risk. If you would invest 2,625 in Aedas Homes SL on November 3, 2024 and sell it today you would earn a total of 360.00 from holding Aedas Homes SL or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SL vs. Mapfre
Performance |
| Timeline |
| Aedas Homes SL |
| Mapfre |
Aedas Homes and Mapfre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Mapfre
The main advantage of trading using opposite Aedas Homes and Mapfre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Mapfre 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 Mapfre will offset losses from the drop in Mapfre's long position.| Aedas Homes vs. Neinor Homes SLU | Aedas Homes vs. Metrovacesa SA | Aedas Homes vs. Merlin Properties SOCIMI | Aedas Homes vs. Lar Espana Real |
| Mapfre vs. Aedas Homes SL | Mapfre vs. Hispanotels Inversiones SOCIMI | Mapfre vs. Ebro Foods | Mapfre vs. NH Hoteles |
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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