Correlation Between Galp Energia and Repsol SA
Can any of the company-specific risk be diversified away by investing in both Galp Energia and Repsol 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 Galp Energia and Repsol SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galp Energia SGPS and Repsol SA, you can compare the effects of market volatilities on Galp Energia and Repsol 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 Galp Energia with a short position of Repsol SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galp Energia and Repsol SA.
Diversification Opportunities for Galp Energia and Repsol SA
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Galp and Repsol is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Galp Energia SGPS and Repsol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol SA and Galp Energia 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 Galp Energia SGPS are associated (or correlated) with Repsol SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol SA has no effect on the direction of Galp Energia i.e., Galp Energia and Repsol SA go up and down completely randomly.
Pair Corralation between Galp Energia and Repsol SA
If you would invest 1,583 in Repsol SA on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Repsol SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Galp Energia SGPS vs. Repsol SA
Performance |
| Timeline |
| Galp Energia SGPS |
| Repsol SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Galp Energia and Repsol SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galp Energia and Repsol SA
The main advantage of trading using opposite Galp Energia and Repsol SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galp Energia position performs unexpectedly, Repsol 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 Repsol SA will offset losses from the drop in Repsol SA's long position.| Galp Energia vs. Equinor ASA ADR | Galp Energia vs. TotalEnergies SE ADR | Galp Energia vs. Ecopetrol SA ADR | Galp Energia vs. National Fuel Gas |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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