Correlation Between Acciona and Aena SA
Can any of the company-specific risk be diversified away by investing in both Acciona and Aena 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 Acciona and Aena SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acciona and Aena SA, you can compare the effects of market volatilities on Acciona and Aena 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 Acciona with a short position of Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acciona and Aena SA.
Diversification Opportunities for Acciona and Aena SA
Very good diversification
The 3 months correlation between Acciona and Aena is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Acciona and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and Acciona 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 Acciona are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of Acciona i.e., Acciona and Aena SA go up and down completely randomly.
Pair Corralation between Acciona and Aena SA
Assuming the 90 days trading horizon Acciona is expected to under-perform the Aena SA. In addition to that, Acciona is 1.4 times more volatile than Aena SA. It trades about -0.03 of its total potential returns per unit of risk. Aena SA is currently generating about 0.1 per unit of volatility. If you would invest 11,293 in Aena SA on September 13, 2024 and sell it today you would earn a total of 8,487 from holding Aena SA or generate 75.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acciona vs. Aena SA
Performance |
| Timeline |
| Acciona |
| Aena SA |
Acciona and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acciona and Aena SA
The main advantage of trading using opposite Acciona and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acciona position performs unexpectedly, Aena 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 Aena SA will offset losses from the drop in Aena SA's long position.The idea behind Acciona and Aena 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.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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