Correlation Between Digimarc and Acciona SA
Can any of the company-specific risk be diversified away by investing in both Digimarc and Acciona 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 Digimarc and Acciona SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and Acciona SA, you can compare the effects of market volatilities on Digimarc and Acciona 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 Digimarc with a short position of Acciona SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Acciona SA.
Diversification Opportunities for Digimarc and Acciona SA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digimarc and Acciona is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and Digimarc 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 Digimarc are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Digimarc i.e., Digimarc and Acciona SA go up and down completely randomly.
Pair Corralation between Digimarc and Acciona SA
Given the investment horizon of 90 days Digimarc is expected to generate 3.11 times more return on investment than Acciona SA. However, Digimarc is 3.11 times more volatile than Acciona SA. It trades about 0.08 of its potential returns per unit of risk. Acciona SA is currently generating about -0.08 per unit of risk. If you would invest 3,877 in Digimarc on October 26, 2024 and sell it today you would earn a total of 232.00 from holding Digimarc or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Digimarc vs. Acciona SA
Performance |
| Timeline |
| Digimarc |
| Acciona SA |
Digimarc and Acciona SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and Acciona SA
The main advantage of trading using opposite Digimarc and Acciona SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc position performs unexpectedly, Acciona 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 Acciona SA will offset losses from the drop in Acciona SA's long position.The idea behind Digimarc and Acciona 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.| Acciona SA vs. JGC Corp | Acciona SA vs. ACS Actividades de | Acciona SA vs. Kajima Corp ADR | Acciona SA vs. ACS Actividades 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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