Correlation Between Cia De and Acciona
Can any of the company-specific risk be diversified away by investing in both Cia De and Acciona 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 Cia De and Acciona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cia de Distribucion and Acciona, you can compare the effects of market volatilities on Cia De and Acciona 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 Cia De with a short position of Acciona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cia De and Acciona.
Diversification Opportunities for Cia De and Acciona
Excellent diversification
The 3 months correlation between Cia and Acciona is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Distribucion and Acciona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona and Cia De 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 Cia de Distribucion are associated (or correlated) with Acciona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona has no effect on the direction of Cia De i.e., Cia De and Acciona go up and down completely randomly.
Pair Corralation between Cia De and Acciona
Assuming the 90 days trading horizon Cia de Distribucion is expected to generate 0.47 times more return on investment than Acciona. However, Cia de Distribucion is 2.11 times less risky than Acciona. It trades about 0.1 of its potential returns per unit of risk. Acciona is currently generating about -0.02 per unit of risk. If you would invest 2,198 in Cia de Distribucion on August 31, 2024 and sell it today you would earn a total of 830.00 from holding Cia de Distribucion or generate 37.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cia de Distribucion vs. Acciona
Performance |
| Timeline |
| Cia de Distribucion |
| Acciona |
Cia De and Acciona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cia De and Acciona
The main advantage of trading using opposite Cia De and Acciona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De position performs unexpectedly, Acciona 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 Acciona will offset losses from the drop in Acciona's long position.The idea behind Cia de Distribucion and Acciona pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |