Correlation Between Grupo Catalana and EDreams Odigeo
Can any of the company-specific risk be diversified away by investing in both Grupo Catalana and EDreams Odigeo 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 Grupo Catalana and EDreams Odigeo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Catalana Occidente and eDreams Odigeo SA, you can compare the effects of market volatilities on Grupo Catalana and EDreams Odigeo 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 Grupo Catalana with a short position of EDreams Odigeo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Catalana and EDreams Odigeo.
Diversification Opportunities for Grupo Catalana and EDreams Odigeo
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and EDreams is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Catalana Occidente and eDreams Odigeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eDreams Odigeo SA and Grupo Catalana 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 Grupo Catalana Occidente are associated (or correlated) with EDreams Odigeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eDreams Odigeo SA has no effect on the direction of Grupo Catalana i.e., Grupo Catalana and EDreams Odigeo go up and down completely randomly.
Pair Corralation between Grupo Catalana and EDreams Odigeo
Assuming the 90 days trading horizon Grupo Catalana Occidente is expected to under-perform the EDreams Odigeo. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Catalana Occidente is 1.81 times less risky than EDreams Odigeo. The stock trades about -0.26 of its potential returns per unit of risk. The eDreams Odigeo SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 675.00 in eDreams Odigeo SA on August 28, 2024 and sell it today you would lose (6.00) from holding eDreams Odigeo SA or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Catalana Occidente vs. eDreams Odigeo SA
Performance |
| Timeline |
| Grupo Catalana Occidente |
| eDreams Odigeo SA |
Grupo Catalana and EDreams Odigeo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Catalana and EDreams Odigeo
The main advantage of trading using opposite Grupo Catalana and EDreams Odigeo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Catalana position performs unexpectedly, EDreams Odigeo 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 EDreams Odigeo will offset losses from the drop in EDreams Odigeo's long position.The idea behind Grupo Catalana Occidente and eDreams Odigeo 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.| EDreams Odigeo vs. Sacyr SA | EDreams Odigeo vs. Melia Hotels | EDreams Odigeo vs. ENCE Energa y | EDreams Odigeo vs. Solaria Energa y |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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