Correlation Between Allianz SE and Mapfre SA
Can any of the company-specific risk be diversified away by investing in both Allianz SE and Mapfre SA 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 Allianz SE and Mapfre SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianz SE and Mapfre SA, you can compare the effects of market volatilities on Allianz SE and Mapfre SA 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 Allianz SE with a short position of Mapfre SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz SE and Mapfre SA.
Diversification Opportunities for Allianz SE and Mapfre SA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allianz and Mapfre is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE and Mapfre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre SA and Allianz SE 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 Allianz SE are associated (or correlated) with Mapfre SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre SA has no effect on the direction of Allianz SE i.e., Allianz SE and Mapfre SA go up and down completely randomly.
Pair Corralation between Allianz SE and Mapfre SA
Assuming the 90 days horizon Allianz SE is expected to generate 1.76 times less return on investment than Mapfre SA. But when comparing it to its historical volatility, Allianz SE is 1.73 times less risky than Mapfre SA. It trades about 0.05 of its potential returns per unit of risk. Mapfre SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Mapfre SA on August 28, 2024 and sell it today you would earn a total of 82.00 from holding Mapfre SA or generate 54.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.39% |
| Values | Daily Returns |
Allianz SE vs. Mapfre SA
Performance |
| Timeline |
| Allianz SE |
| Mapfre SA |
Allianz SE and Mapfre SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianz SE and Mapfre SA
The main advantage of trading using opposite Allianz SE and Mapfre SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz SE position performs unexpectedly, Mapfre SA 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 SA will offset losses from the drop in Mapfre SA's long position.The idea behind Allianz SE and Mapfre 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.| Mapfre SA vs. Fundamental Global | Mapfre SA vs. Waterdrop ADR | Mapfre SA vs. Goosehead Insurance | Mapfre SA vs. Old Republic International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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