Correlation Between Fomento De and Acerinox
Can any of the company-specific risk be diversified away by investing in both Fomento De and Acerinox 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 Fomento De and Acerinox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fomento de Construcciones and Acerinox, you can compare the effects of market volatilities on Fomento De and Acerinox 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 Fomento De with a short position of Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento De and Acerinox.
Diversification Opportunities for Fomento De and Acerinox
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fomento and Acerinox is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fomento de Construcciones and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and Fomento De 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 Fomento de Construcciones are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of Fomento De i.e., Fomento De and Acerinox go up and down completely randomly.
Pair Corralation between Fomento De and Acerinox
Assuming the 90 days trading horizon Fomento de Construcciones is expected to generate 1.43 times more return on investment than Acerinox. However, Fomento De is 1.43 times more volatile than Acerinox. It trades about 0.06 of its potential returns per unit of risk. Acerinox is currently generating about 0.01 per unit of risk. If you would invest 619.00 in Fomento de Construcciones on August 29, 2024 and sell it today you would earn a total of 293.00 from holding Fomento de Construcciones or generate 47.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento de Construcciones vs. Acerinox
Performance |
| Timeline |
| Fomento de Construcciones |
| Acerinox |
Fomento De and Acerinox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento De and Acerinox
The main advantage of trading using opposite Fomento De and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento De position performs unexpectedly, Acerinox 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 Acerinox will offset losses from the drop in Acerinox's long position.| Fomento De vs. Ferrovial | Fomento De vs. ACS Actividades de | Fomento De vs. Acciona | Fomento De vs. Indra A |
| Acerinox vs. ACS Actividades de | Acerinox vs. ArcelorMittal SA | Acerinox vs. Mapfre | Acerinox vs. Ferrovial |
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.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |