Correlation Between Industria and IBEX 35
Can any of the company-specific risk be diversified away by investing in both Industria and IBEX 35 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 Industria and IBEX 35 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industria de Diseno and IBEX 35 Index, you can compare the effects of market volatilities on Industria and IBEX 35 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 Industria with a short position of IBEX 35. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and IBEX 35.
Diversification Opportunities for Industria and IBEX 35
Almost no diversification
The 3 months correlation between Industria and IBEX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and IBEX 35 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBEX 35 Index and Industria 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 Industria de Diseno are associated (or correlated) with IBEX 35. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBEX 35 Index has no effect on the direction of Industria i.e., Industria and IBEX 35 go up and down completely randomly.
Pair Corralation between Industria and IBEX 35
Assuming the 90 days trading horizon Industria de Diseno is expected to generate 1.39 times more return on investment than IBEX 35. However, Industria is 1.39 times more volatile than IBEX 35 Index. It trades about 0.1 of its potential returns per unit of risk. IBEX 35 Index is currently generating about 0.02 per unit of risk. If you would invest 4,453 in Industria de Diseno on August 23, 2024 and sell it today you would earn a total of 675.00 from holding Industria de Diseno or generate 15.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industria de Diseno vs. IBEX 35 Index
Performance |
| Timeline |
Industria and IBEX 35 Volatility Contrast
Predicted Return Density |
| Returns |
Industria de Diseno
Pair trading matchups for Industria
IBEX 35 Index
Pair trading matchups for IBEX 35
Pair Trading with Industria and IBEX 35
The main advantage of trading using opposite Industria and IBEX 35 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria position performs unexpectedly, IBEX 35 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 IBEX 35 will offset losses from the drop in IBEX 35's long position.| Industria vs. Iberdrola SA | Industria vs. Repsol | Industria vs. Banco Santander | Industria vs. ACS Actividades de |
| IBEX 35 vs. Tier1 Technology SA | IBEX 35 vs. Azaria Rental SOCIMI | IBEX 35 vs. Atresmedia Corporacin de | IBEX 35 vs. Elaia Investment Spain |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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