Correlation Between IBEX 35 and Almirall
Can any of the company-specific risk be diversified away by investing in both IBEX 35 and Almirall 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 IBEX 35 and Almirall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBEX 35 Index and Almirall SA, you can compare the effects of market volatilities on IBEX 35 and Almirall 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 IBEX 35 with a short position of Almirall. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX 35 and Almirall.
Diversification Opportunities for IBEX 35 and Almirall
Very weak diversification
The 3 months correlation between IBEX and Almirall is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding IBEX 35 Index and Almirall SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almirall SA and IBEX 35 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 IBEX 35 Index are associated (or correlated) with Almirall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almirall SA has no effect on the direction of IBEX 35 i.e., IBEX 35 and Almirall go up and down completely randomly.
Pair Corralation between IBEX 35 and Almirall
Assuming the 90 days trading horizon IBEX 35 Index is expected to generate 0.65 times more return on investment than Almirall. However, IBEX 35 Index is 1.53 times less risky than Almirall. It trades about -0.04 of its potential returns per unit of risk. Almirall SA is currently generating about -0.16 per unit of risk. If you would invest 1,171,500 in IBEX 35 Index on August 31, 2024 and sell it today you would lose (10,420) from holding IBEX 35 Index 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 |
IBEX 35 Index vs. Almirall SA
Performance |
| Timeline |
IBEX 35 and Almirall Volatility Contrast
Predicted Return Density |
| Returns |
IBEX 35 Index
Pair trading matchups for IBEX 35
Almirall SA
Pair trading matchups for Almirall
Pair Trading with IBEX 35 and Almirall
The main advantage of trading using opposite IBEX 35 and Almirall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 35 position performs unexpectedly, Almirall 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 Almirall will offset losses from the drop in Almirall's long position.| IBEX 35 vs. Hispanotels Inversiones SOCIMI | IBEX 35 vs. Arteche Lantegi Elkartea | IBEX 35 vs. Vytrus Biotech SA | IBEX 35 vs. Borges Agricultural Industrial |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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