Correlation Between IBEX 35 and Indra A
Can any of the company-specific risk be diversified away by investing in both IBEX 35 and Indra A 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 Indra A 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 Indra A, you can compare the effects of market volatilities on IBEX 35 and Indra A 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 Indra A. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX 35 and Indra A.
Diversification Opportunities for IBEX 35 and Indra A
Average diversification
The 3 months correlation between IBEX and Indra is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding IBEX 35 Index and Indra A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indra A 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 Indra A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indra A has no effect on the direction of IBEX 35 i.e., IBEX 35 and Indra A go up and down completely randomly.
Pair Corralation between IBEX 35 and Indra A
Assuming the 90 days trading horizon IBEX 35 Index is expected to under-perform the Indra A. In addition to that, IBEX 35 is 1.25 times more volatile than Indra A. It trades about -0.01 of its total potential returns per unit of risk. Indra A is currently generating about 0.16 per unit of volatility. If you would invest 1,620 in Indra A on September 1, 2024 and sell it today you would earn a total of 46.00 from holding Indra A or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
IBEX 35 Index vs. Indra A
Performance |
| Timeline |
IBEX 35 and Indra A Volatility Contrast
Predicted Return Density |
| Returns |
IBEX 35 Index
Pair trading matchups for IBEX 35
Indra A
Pair trading matchups for Indra A
Pair Trading with IBEX 35 and Indra A
The main advantage of trading using opposite IBEX 35 and Indra A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 35 position performs unexpectedly, Indra A 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 Indra A will offset losses from the drop in Indra A's long position.| IBEX 35 vs. All Iron Re | IBEX 35 vs. Tier1 Technology SA | IBEX 35 vs. Cellnex Telecom SA | IBEX 35 vs. Ebro Foods |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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