Correlation Between IBEX 35 and Talgo SA
Can any of the company-specific risk be diversified away by investing in both IBEX 35 and Talgo SA 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 Talgo SA 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 Talgo SA, you can compare the effects of market volatilities on IBEX 35 and Talgo SA 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 Talgo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX 35 and Talgo SA.
Diversification Opportunities for IBEX 35 and Talgo SA
Poor diversification
The 3 months correlation between IBEX and Talgo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding IBEX 35 Index and Talgo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talgo 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 Talgo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talgo SA has no effect on the direction of IBEX 35 i.e., IBEX 35 and Talgo SA go up and down completely randomly.
Pair Corralation between IBEX 35 and Talgo SA
Assuming the 90 days trading horizon IBEX 35 Index is expected to generate 0.46 times more return on investment than Talgo SA. However, IBEX 35 Index is 2.18 times less risky than Talgo SA. It trades about 0.08 of its potential returns per unit of risk. Talgo SA is currently generating about 0.02 per unit of risk. If you would invest 942,320 in IBEX 35 Index on November 28, 2024 and sell it today you would earn a total of 369,360 from holding IBEX 35 Index or generate 39.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
IBEX 35 Index vs. Talgo SA
Performance |
| Timeline |
IBEX 35 and Talgo SA Volatility Contrast
Predicted Return Density |
| Returns |
IBEX 35 Index
Pair trading matchups for IBEX 35
Talgo SA
Pair trading matchups for Talgo SA
Pair Trading with IBEX 35 and Talgo SA
The main advantage of trading using opposite IBEX 35 and Talgo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 35 position performs unexpectedly, Talgo SA 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 Talgo SA will offset losses from the drop in Talgo SA's long position.| IBEX 35 vs. Hispanotels Inversiones SOCIMI | IBEX 35 vs. Energy Solar Tech | IBEX 35 vs. Caixabank SA | IBEX 35 vs. Arrienda Rental Properties |
| Talgo SA vs. Construcciones y Auxiliar | Talgo SA vs. Gestamp Automocion SA | Talgo SA vs. ENCE Energa y | Talgo SA vs. Tecnicas Reunidas |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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