Correlation Between Carmila SA and Covivio SA
Can any of the company-specific risk be diversified away by investing in both Carmila SA and Covivio 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 Carmila SA and Covivio SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmila SA and Covivio SA, you can compare the effects of market volatilities on Carmila SA and Covivio 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 Carmila SA with a short position of Covivio SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmila SA and Covivio SA.
Diversification Opportunities for Carmila SA and Covivio SA
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carmila and Covivio is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Carmila SA and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA and Carmila SA 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 Carmila SA are associated (or correlated) with Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of Carmila SA i.e., Carmila SA and Covivio SA go up and down completely randomly.
Pair Corralation between Carmila SA and Covivio SA
Assuming the 90 days trading horizon Carmila SA is expected to under-perform the Covivio SA. But the stock apears to be less risky and, when comparing its historical volatility, Carmila SA is 1.35 times less risky than Covivio SA. The stock trades about -0.36 of its potential returns per unit of risk. The Covivio SA is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 5,440 in Covivio SA on August 28, 2024 and sell it today you would lose (200.00) from holding Covivio SA or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Carmila SA vs. Covivio SA
Performance |
| Timeline |
| Carmila SA |
| Covivio SA |
Carmila SA and Covivio SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmila SA and Covivio SA
The main advantage of trading using opposite Carmila SA and Covivio SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmila SA position performs unexpectedly, Covivio 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 Covivio SA will offset losses from the drop in Covivio SA's long position.| Carmila SA vs. Mercialys SA | Carmila SA vs. Icade SA | Carmila SA vs. Klepierre SA | Carmila SA vs. Altarea SCA |
| Covivio SA vs. Gecina SA | Covivio SA vs. Icade SA | Covivio SA vs. Klepierre SA | Covivio SA vs. Mercialys 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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