Correlation Between Ferrovial and Inmobiliaria Colonial
Can any of the company-specific risk be diversified away by investing in both Ferrovial and Inmobiliaria Colonial 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 Inmobiliaria Colonial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrovial and Inmobiliaria Colonial SA, you can compare the effects of market volatilities on Ferrovial and Inmobiliaria Colonial 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 Inmobiliaria Colonial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrovial and Inmobiliaria Colonial.
Diversification Opportunities for Ferrovial and Inmobiliaria Colonial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ferrovial and Inmobiliaria is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ferrovial and Inmobiliaria Colonial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inmobiliaria Colonial 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 are associated (or correlated) with Inmobiliaria Colonial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inmobiliaria Colonial has no effect on the direction of Ferrovial i.e., Ferrovial and Inmobiliaria Colonial go up and down completely randomly.
Pair Corralation between Ferrovial and Inmobiliaria Colonial
Assuming the 90 days trading horizon Ferrovial is expected to generate 0.7 times more return on investment than Inmobiliaria Colonial. However, Ferrovial is 1.43 times less risky than Inmobiliaria Colonial. It trades about 0.27 of its potential returns per unit of risk. Inmobiliaria Colonial SA is currently generating about -0.05 per unit of risk. If you would invest 3,641 in Ferrovial on September 1, 2024 and sell it today you would earn a total of 261.00 from holding Ferrovial or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrovial vs. Inmobiliaria Colonial SA
Performance |
| Timeline |
| Ferrovial |
| Inmobiliaria Colonial |
Ferrovial and Inmobiliaria Colonial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrovial and Inmobiliaria Colonial
The main advantage of trading using opposite Ferrovial and Inmobiliaria Colonial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrovial position performs unexpectedly, Inmobiliaria Colonial 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 Inmobiliaria Colonial will offset losses from the drop in Inmobiliaria Colonial's long position.The idea behind Ferrovial and Inmobiliaria Colonial SA 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.| Inmobiliaria Colonial vs. Merlin Properties SOCIMI | Inmobiliaria Colonial vs. Ferrovial | Inmobiliaria Colonial vs. Bankinter | Inmobiliaria Colonial vs. Acerinox |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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