Correlation Between ANT and Iberdrola
Can any of the company-specific risk be diversified away by investing in both ANT and Iberdrola 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 ANT and Iberdrola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANT and Iberdrola SA, you can compare the effects of market volatilities on ANT and Iberdrola 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 ANT with a short position of Iberdrola. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and Iberdrola.
Diversification Opportunities for ANT and Iberdrola
Weak diversification
The 3 months correlation between ANT and Iberdrola is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Iberdrola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iberdrola SA and ANT 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 ANT are associated (or correlated) with Iberdrola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iberdrola SA has no effect on the direction of ANT i.e., ANT and Iberdrola go up and down completely randomly.
Pair Corralation between ANT and Iberdrola
Assuming the 90 days trading horizon ANT is expected to generate 45.08 times more return on investment than Iberdrola. However, ANT is 45.08 times more volatile than Iberdrola SA. It trades about 0.1 of its potential returns per unit of risk. Iberdrola SA is currently generating about 0.06 per unit of risk. If you would invest 281.00 in ANT on November 2, 2024 and sell it today you would lose (134.00) from holding ANT or give up 47.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.45% |
| Values | Daily Returns |
ANT vs. Iberdrola SA
Performance |
| Timeline |
| ANT |
| Iberdrola SA |
ANT and Iberdrola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANT and Iberdrola
The main advantage of trading using opposite ANT and Iberdrola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANT position performs unexpectedly, Iberdrola 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 Iberdrola will offset losses from the drop in Iberdrola's long position.The idea behind ANT and Iberdrola 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.| Iberdrola vs. EDP Energias de | Iberdrola vs. ENEL Societa per | Iberdrola vs. Engie SA ADR | Iberdrola vs. RWE AG PK |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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