Correlation Between Fomento De and Realia
Can any of the company-specific risk be diversified away by investing in both Fomento De and Realia 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 Realia 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 Realia, you can compare the effects of market volatilities on Fomento De and Realia 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 Realia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento De and Realia.
Diversification Opportunities for Fomento De and Realia
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fomento and Realia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fomento de Construcciones and Realia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realia 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 Realia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realia has no effect on the direction of Fomento De i.e., Fomento De and Realia go up and down completely randomly.
Pair Corralation between Fomento De and Realia
Assuming the 90 days trading horizon Fomento de Construcciones is expected to generate 1.09 times more return on investment than Realia. However, Fomento De is 1.09 times more volatile than Realia. It trades about 0.01 of its potential returns per unit of risk. Realia is currently generating about 0.0 per unit of risk. If you would invest 916.00 in Fomento de Construcciones on September 2, 2024 and sell it today you would lose (6.00) from holding Fomento de Construcciones or give up 0.66% 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. Realia
Performance |
| Timeline |
| Fomento de Construcciones |
| Realia |
Fomento De and Realia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento De and Realia
The main advantage of trading using opposite Fomento De and Realia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento De position performs unexpectedly, Realia 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 Realia will offset losses from the drop in Realia's long position.| Fomento De vs. Ferrovial | Fomento De vs. ACS Actividades de | Fomento De vs. Acciona | Fomento De vs. Indra A |
| Realia vs. NH Hoteles | Realia vs. Fomento de Construcciones | Realia vs. Inmobiliaria Colonial SA | Realia 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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