Correlation Between Acciona and Sacyr SA
Can any of the company-specific risk be diversified away by investing in both Acciona and Sacyr 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 Sacyr SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acciona and Sacyr SA, you can compare the effects of market volatilities on Acciona and Sacyr 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 Sacyr SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acciona and Sacyr SA.
Diversification Opportunities for Acciona and Sacyr SA
Poor diversification
The 3 months correlation between Acciona and Sacyr is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Acciona and Sacyr SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sacyr 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 Sacyr SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sacyr SA has no effect on the direction of Acciona i.e., Acciona and Sacyr SA go up and down completely randomly.
Pair Corralation between Acciona and Sacyr SA
Assuming the 90 days trading horizon Acciona is expected to generate 1.82 times more return on investment than Sacyr SA. However, Acciona is 1.82 times more volatile than Sacyr SA. It trades about 0.06 of its potential returns per unit of risk. Sacyr SA is currently generating about 0.04 per unit of risk. If you would invest 11,740 in Acciona on September 1, 2024 and sell it today you would earn a total of 290.00 from holding Acciona or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acciona vs. Sacyr SA
Performance |
| Timeline |
| Acciona |
| Sacyr SA |
Acciona and Sacyr SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acciona and Sacyr SA
The main advantage of trading using opposite Acciona and Sacyr SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acciona position performs unexpectedly, Sacyr 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 Sacyr SA will offset losses from the drop in Sacyr SA's long position.The idea behind Acciona and Sacyr 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.| Sacyr SA vs. ArcelorMittal SA | Sacyr SA vs. Acerinox | Sacyr SA vs. Fomento de Construcciones | Sacyr SA vs. ACS Actividades 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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