Correlation Between Berkeley Energia and Repsol
Can any of the company-specific risk be diversified away by investing in both Berkeley Energia and Repsol 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 Berkeley Energia and Repsol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkeley Energia Limited and Repsol, you can compare the effects of market volatilities on Berkeley Energia and Repsol 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 Berkeley Energia with a short position of Repsol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkeley Energia and Repsol.
Diversification Opportunities for Berkeley Energia and Repsol
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Berkeley and Repsol is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Berkeley Energia Limited and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol and Berkeley Energia 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 Berkeley Energia Limited are associated (or correlated) with Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of Berkeley Energia i.e., Berkeley Energia and Repsol go up and down completely randomly.
Pair Corralation between Berkeley Energia and Repsol
Assuming the 90 days trading horizon Berkeley Energia Limited is expected to generate 2.83 times more return on investment than Repsol. However, Berkeley Energia is 2.83 times more volatile than Repsol. It trades about 0.04 of its potential returns per unit of risk. Repsol is currently generating about -0.01 per unit of risk. If you would invest 21.00 in Berkeley Energia Limited on November 2, 2024 and sell it today you would earn a total of 2.00 from holding Berkeley Energia Limited or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.06% |
| Values | Daily Returns |
Berkeley Energia Limited vs. Repsol
Performance |
| Timeline |
| Berkeley Energia |
| Repsol |
Berkeley Energia and Repsol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkeley Energia and Repsol
The main advantage of trading using opposite Berkeley Energia and Repsol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkeley Energia position performs unexpectedly, Repsol 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 Repsol will offset losses from the drop in Repsol's long position.| Berkeley Energia vs. Naturhouse Health SA | Berkeley Energia vs. Borges Agricultural Industrial | Berkeley Energia vs. NH Hoteles | Berkeley Energia vs. Arrienda Rental Properties |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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