Correlation Between Ferrovial and Acciona
Can any of the company-specific risk be diversified away by investing in both Ferrovial and Acciona 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 Ferrovial and Acciona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrovial SA and Acciona, you can compare the effects of market volatilities on Ferrovial and Acciona 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 Ferrovial with a short position of Acciona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrovial and Acciona.
Diversification Opportunities for Ferrovial and Acciona
Very good diversification
The 3 months correlation between Ferrovial and Acciona is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ferrovial SA and Acciona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona and Ferrovial 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 Ferrovial SA are associated (or correlated) with Acciona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona has no effect on the direction of Ferrovial i.e., Ferrovial and Acciona go up and down completely randomly.
Pair Corralation between Ferrovial and Acciona
Assuming the 90 days trading horizon Ferrovial SA is expected to generate 0.63 times more return on investment than Acciona. However, Ferrovial SA is 1.58 times less risky than Acciona. It trades about 0.06 of its potential returns per unit of risk. Acciona is currently generating about 0.01 per unit of risk. If you would invest 3,488 in Ferrovial SA on November 3, 2024 and sell it today you would earn a total of 652.00 from holding Ferrovial SA or generate 18.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrovial SA vs. Acciona
Performance |
| Timeline |
| Ferrovial SA |
| Acciona |
Ferrovial and Acciona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrovial and Acciona
The main advantage of trading using opposite Ferrovial and Acciona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrovial position performs unexpectedly, Acciona 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 will offset losses from the drop in Acciona's long position.The idea behind Ferrovial SA and Acciona 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.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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