Correlation Between IBEX 35 and Energy Solar
Can any of the company-specific risk be diversified away by investing in both IBEX 35 and Energy Solar 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 Energy Solar 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 Energy Solar Tech, you can compare the effects of market volatilities on IBEX 35 and Energy Solar 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 Energy Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX 35 and Energy Solar.
Diversification Opportunities for IBEX 35 and Energy Solar
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IBEX and Energy is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding IBEX 35 Index and Energy Solar Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Solar Tech 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 Energy Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Solar Tech has no effect on the direction of IBEX 35 i.e., IBEX 35 and Energy Solar go up and down completely randomly.
Pair Corralation between IBEX 35 and Energy Solar
Assuming the 90 days trading horizon IBEX 35 Index is expected to under-perform the Energy Solar. But the index apears to be less risky and, when comparing its historical volatility, IBEX 35 Index is 2.16 times less risky than Energy Solar. The index trades about -0.08 of its potential returns per unit of risk. The Energy Solar Tech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 297.00 in Energy Solar Tech on August 30, 2024 and sell it today you would earn a total of 8.00 from holding Energy Solar Tech or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBEX 35 Index vs. Energy Solar Tech
Performance |
| Timeline |
IBEX 35 and Energy Solar Volatility Contrast
Predicted Return Density |
| Returns |
IBEX 35 Index
Pair trading matchups for IBEX 35
Energy Solar Tech
Pair trading matchups for Energy Solar
Pair Trading with IBEX 35 and Energy Solar
The main advantage of trading using opposite IBEX 35 and Energy Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 35 position performs unexpectedly, Energy Solar 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 Energy Solar will offset losses from the drop in Energy Solar's long position.| IBEX 35 vs. Azaria Rental SOCIMI | IBEX 35 vs. Tier1 Technology SA | IBEX 35 vs. Hispanotels Inversiones SOCIMI | IBEX 35 vs. NH Hoteles |
| Energy Solar vs. Metrovacesa SA | Energy Solar vs. Atom Hoteles Socimi | Energy Solar vs. Aedas Homes SL | Energy Solar vs. Hispanotels Inversiones SOCIMI |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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