Correlation Between IBEX 35 and Lar Espana
Can any of the company-specific risk be diversified away by investing in both IBEX 35 and Lar Espana 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 Lar Espana 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 Lar Espana Real, you can compare the effects of market volatilities on IBEX 35 and Lar Espana 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 Lar Espana. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX 35 and Lar Espana.
Diversification Opportunities for IBEX 35 and Lar Espana
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IBEX and Lar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding IBEX 35 Index and Lar Espana Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lar Espana Real 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 Lar Espana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lar Espana Real has no effect on the direction of IBEX 35 i.e., IBEX 35 and Lar Espana go up and down completely randomly.
Pair Corralation between IBEX 35 and Lar Espana
Assuming the 90 days trading horizon IBEX 35 Index is expected to under-perform the Lar Espana. In addition to that, IBEX 35 is 1.79 times more volatile than Lar Espana Real. It trades about -0.11 of its total potential returns per unit of risk. Lar Espana Real is currently generating about -0.08 per unit of volatility. If you would invest 822.00 in Lar Espana Real on August 28, 2024 and sell it today you would lose (8.00) from holding Lar Espana Real or give up 0.97% 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. Lar Espana Real
Performance |
| Timeline |
IBEX 35 and Lar Espana Volatility Contrast
Predicted Return Density |
| Returns |
IBEX 35 Index
Pair trading matchups for IBEX 35
Lar Espana Real
Pair trading matchups for Lar Espana
Pair Trading with IBEX 35 and Lar Espana
The main advantage of trading using opposite IBEX 35 and Lar Espana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 35 position performs unexpectedly, Lar Espana 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 Lar Espana will offset losses from the drop in Lar Espana's long position.| IBEX 35 vs. Caixabank SA | IBEX 35 vs. Melia Hotels | IBEX 35 vs. NH Hoteles | IBEX 35 vs. Borges Agricultural Industrial |
| Lar Espana vs. Mercal Inmuebles Socimi | Lar Espana vs. Metrovacesa SA | Lar Espana vs. Elecnor SA | Lar Espana vs. Mapfre |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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