Correlation Between Aeroports and Aena SME
Can any of the company-specific risk be diversified away by investing in both Aeroports and Aena SME 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 Aeroports and Aena SME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeroports de Paris and Aena SME SA, you can compare the effects of market volatilities on Aeroports and Aena SME 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 Aeroports with a short position of Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeroports and Aena SME.
Diversification Opportunities for Aeroports and Aena SME
Modest diversification
The 3 months correlation between Aeroports and Aena is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aeroports de Paris and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA and Aeroports 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 Aeroports de Paris are associated (or correlated) with Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Aeroports i.e., Aeroports and Aena SME go up and down completely randomly.
Pair Corralation between Aeroports and Aena SME
Assuming the 90 days horizon Aeroports de Paris is expected to under-perform the Aena SME. In addition to that, Aeroports is 1.22 times more volatile than Aena SME SA. It trades about -0.3 of its total potential returns per unit of risk. Aena SME SA is currently generating about 0.22 per unit of volatility. If you would invest 2,041 in Aena SME SA on November 1, 2024 and sell it today you would earn a total of 120.00 from holding Aena SME SA or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aeroports de Paris vs. Aena SME SA
Performance |
| Timeline |
| Aeroports de Paris |
| Aena SME SA |
Aeroports and Aena SME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeroports and Aena SME
The main advantage of trading using opposite Aeroports and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeroports position performs unexpectedly, Aena SME 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 SME will offset losses from the drop in Aena SME's long position.| Aeroports vs. Japan Airport Terminal | Aeroports vs. Aena SME SA | Aeroports vs. Airports of Thailand | Aeroports vs. Aena SME SA |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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