Correlation Between IBEX 35 and Global Dominion
Can any of the company-specific risk be diversified away by investing in both IBEX 35 and Global Dominion 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 Global Dominion 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 Global Dominion Access, you can compare the effects of market volatilities on IBEX 35 and Global Dominion 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 Global Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX 35 and Global Dominion.
Diversification Opportunities for IBEX 35 and Global Dominion
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IBEX and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IBEX 35 Index and Global Dominion Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dominion Access 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 Global Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dominion Access has no effect on the direction of IBEX 35 i.e., IBEX 35 and Global Dominion go up and down completely randomly.
Pair Corralation between IBEX 35 and Global Dominion
Assuming the 90 days trading horizon IBEX 35 is expected to generate 1.26 times less return on investment than Global Dominion. But when comparing it to its historical volatility, IBEX 35 Index is 1.86 times less risky than Global Dominion. It trades about 0.35 of its potential returns per unit of risk. Global Dominion Access is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 283.00 in Global Dominion Access on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Global Dominion Access or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
IBEX 35 Index vs. Global Dominion Access
Performance |
| Timeline |
IBEX 35 and Global Dominion Volatility Contrast
Predicted Return Density |
| Returns |
IBEX 35 Index
Pair trading matchups for IBEX 35
Global Dominion Access
Pair trading matchups for Global Dominion
Pair Trading with IBEX 35 and Global Dominion
The main advantage of trading using opposite IBEX 35 and Global Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 35 position performs unexpectedly, Global Dominion 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 Global Dominion will offset losses from the drop in Global Dominion's long position.| IBEX 35 vs. Parlem Telecom Companyia | IBEX 35 vs. International Consolidated Airlines | IBEX 35 vs. Aedas Homes SL | IBEX 35 vs. Inhome Prime Properties |
| Global Dominion vs. CIE Automotive SA | Global Dominion vs. Gestamp Automocion SA | Global Dominion vs. Vidrala SA | Global Dominion vs. Miquel y Costas |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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