Correlation Between Jeronimo Martins and Galp Energia
Can any of the company-specific risk be diversified away by investing in both Jeronimo Martins and Galp Energia 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 Jeronimo Martins and Galp Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeronimo Martins SGPS and Galp Energia SGPS, you can compare the effects of market volatilities on Jeronimo Martins and Galp Energia 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 Jeronimo Martins with a short position of Galp Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeronimo Martins and Galp Energia.
Diversification Opportunities for Jeronimo Martins and Galp Energia
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jeronimo and Galp is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jeronimo Martins SGPS and Galp Energia SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galp Energia SGPS and Jeronimo Martins 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 Jeronimo Martins SGPS are associated (or correlated) with Galp Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galp Energia SGPS has no effect on the direction of Jeronimo Martins i.e., Jeronimo Martins and Galp Energia go up and down completely randomly.
Pair Corralation between Jeronimo Martins and Galp Energia
Assuming the 90 days trading horizon Jeronimo Martins is expected to generate 16.64 times less return on investment than Galp Energia. But when comparing it to its historical volatility, Jeronimo Martins SGPS is 1.03 times less risky than Galp Energia. It trades about 0.0 of its potential returns per unit of risk. Galp Energia SGPS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,114 in Galp Energia SGPS on August 30, 2024 and sell it today you would earn a total of 451.00 from holding Galp Energia SGPS or generate 40.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeronimo Martins SGPS vs. Galp Energia SGPS
Performance |
| Timeline |
| Jeronimo Martins SGPS |
| Galp Energia SGPS |
Jeronimo Martins and Galp Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeronimo Martins and Galp Energia
The main advantage of trading using opposite Jeronimo Martins and Galp Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeronimo Martins position performs unexpectedly, Galp Energia 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 Galp Energia will offset losses from the drop in Galp Energia's long position.| Jeronimo Martins vs. Sonae SGPS SA | Jeronimo Martins vs. Galp Energia SGPS | Jeronimo Martins vs. EDP Energias | Jeronimo Martins vs. Altri SGPS SA |
| Galp Energia vs. EDP Energias | Galp Energia vs. Sonae SGPS SA | Galp Energia vs. Banco Comercial Portugues | Galp Energia vs. NOS SGPS SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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