Correlation Between Elecnor SA and Mapfre
Can any of the company-specific risk be diversified away by investing in both Elecnor SA and Mapfre 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 Elecnor SA and Mapfre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elecnor SA and Mapfre, you can compare the effects of market volatilities on Elecnor SA and Mapfre 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 Elecnor SA with a short position of Mapfre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elecnor SA and Mapfre.
Diversification Opportunities for Elecnor SA and Mapfre
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elecnor and Mapfre is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Elecnor SA and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Elecnor 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 Elecnor SA are associated (or correlated) with Mapfre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre has no effect on the direction of Elecnor SA i.e., Elecnor SA and Mapfre go up and down completely randomly.
Pair Corralation between Elecnor SA and Mapfre
Assuming the 90 days trading horizon Elecnor SA is expected to generate 1.01 times more return on investment than Mapfre. However, Elecnor SA is 1.01 times more volatile than Mapfre. It trades about 0.1 of its potential returns per unit of risk. Mapfre is currently generating about 0.03 per unit of risk. If you would invest 1,948 in Elecnor SA on August 27, 2024 and sell it today you would earn a total of 57.00 from holding Elecnor SA or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elecnor SA vs. Mapfre
Performance |
| Timeline |
| Elecnor SA |
| Mapfre |
Elecnor SA and Mapfre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elecnor SA and Mapfre
The main advantage of trading using opposite Elecnor SA and Mapfre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elecnor SA position performs unexpectedly, Mapfre 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 Mapfre will offset losses from the drop in Mapfre's long position.| Elecnor SA vs. Miquel y Costas | Elecnor SA vs. Construcciones y Auxiliar | Elecnor SA vs. CIE Automotive SA | Elecnor SA vs. Metrovacesa 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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