Correlation Between Fomento De and Renta Corporacion
Can any of the company-specific risk be diversified away by investing in both Fomento De and Renta Corporacion 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 Renta Corporacion 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 Renta Corporacion Real, you can compare the effects of market volatilities on Fomento De and Renta Corporacion 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 Renta Corporacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento De and Renta Corporacion.
Diversification Opportunities for Fomento De and Renta Corporacion
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fomento and Renta is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fomento de Construcciones and Renta Corporacion Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renta Corporacion Real 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 Renta Corporacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renta Corporacion Real has no effect on the direction of Fomento De i.e., Fomento De and Renta Corporacion go up and down completely randomly.
Pair Corralation between Fomento De and Renta Corporacion
Assuming the 90 days trading horizon Fomento de Construcciones is expected to generate 0.46 times more return on investment than Renta Corporacion. However, Fomento de Construcciones is 2.18 times less risky than Renta Corporacion. It trades about -0.15 of its potential returns per unit of risk. Renta Corporacion Real is currently generating about -0.1 per unit of risk. If you would invest 918.00 in Fomento de Construcciones on September 25, 2024 and sell it today you would lose (35.00) from holding Fomento de Construcciones or give up 3.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento de Construcciones vs. Renta Corporacion Real
Performance |
| Timeline |
| Fomento de Construcciones |
| Renta Corporacion Real |
Fomento De and Renta Corporacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento De and Renta Corporacion
The main advantage of trading using opposite Fomento De and Renta Corporacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento De position performs unexpectedly, Renta Corporacion 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 Renta Corporacion will offset losses from the drop in Renta Corporacion's long position.| Fomento De vs. Enags SA | Fomento De vs. ACS Actividades de | Fomento De vs. Viscofan | Fomento De vs. Mapfre |
| Renta Corporacion vs. NH Hoteles | Renta Corporacion vs. Fomento de Construcciones | Renta Corporacion vs. Aedas Homes SL | Renta Corporacion vs. Indra A |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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