Correlation Between Almirall and Metrovacesa
Can any of the company-specific risk be diversified away by investing in both Almirall 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 Almirall and Metrovacesa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Almirall SA and Metrovacesa SA, you can compare the effects of market volatilities on Almirall 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 Almirall with a short position of Metrovacesa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almirall and Metrovacesa.
Diversification Opportunities for Almirall and Metrovacesa
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Almirall and Metrovacesa is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Almirall SA and Metrovacesa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrovacesa SA and Almirall 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 Almirall SA 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 Almirall i.e., Almirall and Metrovacesa go up and down completely randomly.
Pair Corralation between Almirall and Metrovacesa
Assuming the 90 days trading horizon Almirall is expected to generate 28.36 times less return on investment than Metrovacesa. In addition to that, Almirall is 1.31 times more volatile than Metrovacesa SA. It trades about 0.0 of its total potential returns per unit of risk. Metrovacesa SA is currently generating about 0.08 per unit of volatility. If you would invest 831.00 in Metrovacesa SA on September 2, 2024 and sell it today you would earn a total of 42.00 from holding Metrovacesa SA or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Almirall SA vs. Metrovacesa SA
Performance |
| Timeline |
| Almirall SA |
| Metrovacesa SA |
Almirall and Metrovacesa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Almirall and Metrovacesa
The main advantage of trading using opposite Almirall and Metrovacesa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Almirall 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 Almirall SA 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.| Metrovacesa vs. NH Hoteles | Metrovacesa vs. Fomento de Construcciones | Metrovacesa vs. Inmobiliaria Colonial SA | Metrovacesa vs. Indra A |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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