Correlation Between Aena SA and Merlin Properties
Can any of the company-specific risk be diversified away by investing in both Aena SA and Merlin Properties 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 Aena SA and Merlin Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SA and Merlin Properties SOCIMI, you can compare the effects of market volatilities on Aena SA and Merlin Properties 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 Aena SA with a short position of Merlin Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SA and Merlin Properties.
Diversification Opportunities for Aena SA and Merlin Properties
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aena and Merlin is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and Merlin Properties SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merlin Properties SOCIMI and Aena SA 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 Aena SA are associated (or correlated) with Merlin Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merlin Properties SOCIMI has no effect on the direction of Aena SA i.e., Aena SA and Merlin Properties go up and down completely randomly.
Pair Corralation between Aena SA and Merlin Properties
Assuming the 90 days trading horizon Aena SA is expected to generate 0.7 times more return on investment than Merlin Properties. However, Aena SA is 1.42 times less risky than Merlin Properties. It trades about 0.14 of its potential returns per unit of risk. Merlin Properties SOCIMI is currently generating about 0.08 per unit of risk. If you would invest 13,104 in Aena SA on August 25, 2024 and sell it today you would earn a total of 6,936 from holding Aena SA or generate 52.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aena SA vs. Merlin Properties SOCIMI
Performance |
| Timeline |
| Aena SA |
| Merlin Properties SOCIMI |
Aena SA and Merlin Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aena SA and Merlin Properties
The main advantage of trading using opposite Aena SA and Merlin Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SA position performs unexpectedly, Merlin Properties 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 Merlin Properties will offset losses from the drop in Merlin Properties' long position.| Aena SA vs. Borges Agricultural Industrial | Aena SA vs. NH Hoteles | Aena SA vs. All Iron Re | Aena SA vs. Hispanotels Inversiones SOCIMI |
| Merlin Properties vs. Neinor Homes SLU | Merlin Properties vs. Metrovacesa SA | Merlin Properties vs. Atresmedia Corporacin de |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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