Correlation Between Inmobiliaria Colonial and Merlin Properties
Can any of the company-specific risk be diversified away by investing in both Inmobiliaria Colonial and Merlin Properties 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 Inmobiliaria Colonial and Merlin Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inmobiliaria Colonial SA and Merlin Properties SOCIMI, you can compare the effects of market volatilities on Inmobiliaria Colonial and Merlin Properties 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 Inmobiliaria Colonial with a short position of Merlin Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inmobiliaria Colonial and Merlin Properties.
Diversification Opportunities for Inmobiliaria Colonial and Merlin Properties
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inmobiliaria and Merlin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Inmobiliaria Colonial SA and Merlin Properties SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merlin Properties SOCIMI and Inmobiliaria Colonial 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 Inmobiliaria Colonial SA are associated (or correlated) with Merlin Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merlin Properties SOCIMI has no effect on the direction of Inmobiliaria Colonial i.e., Inmobiliaria Colonial and Merlin Properties go up and down completely randomly.
Pair Corralation between Inmobiliaria Colonial and Merlin Properties
Assuming the 90 days trading horizon Inmobiliaria Colonial SA is expected to under-perform the Merlin Properties. But the stock apears to be less risky and, when comparing its historical volatility, Inmobiliaria Colonial SA is 1.31 times less risky than Merlin Properties. The stock trades about -0.13 of its potential returns per unit of risk. The Merlin Properties SOCIMI is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,049 in Merlin Properties SOCIMI on August 25, 2024 and sell it today you would lose (16.00) from holding Merlin Properties SOCIMI or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inmobiliaria Colonial SA vs. Merlin Properties SOCIMI
Performance |
| Timeline |
| Inmobiliaria Colonial |
| Merlin Properties SOCIMI |
Inmobiliaria Colonial and Merlin Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inmobiliaria Colonial and Merlin Properties
The main advantage of trading using opposite Inmobiliaria Colonial and Merlin Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inmobiliaria Colonial position performs unexpectedly, Merlin Properties 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 Merlin Properties will offset losses from the drop in Merlin Properties' long position.| Inmobiliaria Colonial vs. Neinor Homes SLU | Inmobiliaria Colonial vs. Metrovacesa SA | Inmobiliaria Colonial vs. Atresmedia Corporacin de |
| Merlin Properties vs. Neinor Homes SLU | Merlin Properties vs. Metrovacesa SA | Merlin Properties vs. Atresmedia Corporacin 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 CEOs Directory module to screen CEOs from public companies around the world.
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