Correlation Between Ferrovial and Grifols SA
Can any of the company-specific risk be diversified away by investing in both Ferrovial and Grifols SA 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 Grifols SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrovial and Grifols SA, you can compare the effects of market volatilities on Ferrovial and Grifols SA 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 Grifols SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrovial and Grifols SA.
Diversification Opportunities for Ferrovial and Grifols SA
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ferrovial and Grifols is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ferrovial and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA 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 Grifols SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grifols SA has no effect on the direction of Ferrovial i.e., Ferrovial and Grifols SA go up and down completely randomly.
Pair Corralation between Ferrovial and Grifols SA
Assuming the 90 days trading horizon Ferrovial is expected to generate 0.29 times more return on investment than Grifols SA. However, Ferrovial is 3.43 times less risky than Grifols SA. It trades about 0.09 of its potential returns per unit of risk. Grifols SA is currently generating about 0.01 per unit of risk. If you would invest 2,368 in Ferrovial on August 26, 2024 and sell it today you would earn a total of 1,362 from holding Ferrovial or generate 57.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrovial vs. Grifols SA
Performance |
| Timeline |
| Ferrovial |
| Grifols SA |
Ferrovial and Grifols SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrovial and Grifols SA
The main advantage of trading using opposite Ferrovial and Grifols SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrovial position performs unexpectedly, Grifols SA 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 Grifols SA will offset losses from the drop in Grifols SA's long position.The idea behind Ferrovial and Grifols 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.| Grifols SA vs. ACS Actividades de | Grifols SA vs. Acerinox | Grifols SA vs. Ferrovial | Grifols SA vs. International Consolidated Airlines |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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