Correlation Between Acciona and Arima Real
Can any of the company-specific risk be diversified away by investing in both Acciona and Arima Real 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 Arima Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acciona and Arima Real Estate, you can compare the effects of market volatilities on Acciona and Arima Real 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 Arima Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acciona and Arima Real.
Diversification Opportunities for Acciona and Arima Real
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acciona and Arima is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Acciona and Arima Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arima Real Estate 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 Arima Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arima Real Estate has no effect on the direction of Acciona i.e., Acciona and Arima Real go up and down completely randomly.
Pair Corralation between Acciona and Arima Real
Assuming the 90 days trading horizon Acciona is expected to generate 2.43 times more return on investment than Arima Real. However, Acciona is 2.43 times more volatile than Arima Real Estate. It trades about 0.02 of its potential returns per unit of risk. Arima Real Estate is currently generating about -0.13 per unit of risk. If you would invest 12,060 in Acciona on August 30, 2024 and sell it today you would earn a total of 30.00 from holding Acciona or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acciona vs. Arima Real Estate
Performance |
| Timeline |
| Acciona |
| Arima Real Estate |
Acciona and Arima Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acciona and Arima Real
The main advantage of trading using opposite Acciona and Arima Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acciona position performs unexpectedly, Arima Real 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 Arima Real will offset losses from the drop in Arima Real's long position.The idea behind Acciona and Arima Real Estate 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.| Arima Real vs. Lar Espana Real | Arima Real vs. Inmobiliaria Colonial SA | Arima Real vs. Aedas Homes SL | Arima Real vs. Metrovacesa SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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