Correlation Between Lar Espana and Neinor Homes
Can any of the company-specific risk be diversified away by investing in both Lar Espana and Neinor Homes 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 Lar Espana and Neinor Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lar Espana Real and Neinor Homes SLU, you can compare the effects of market volatilities on Lar Espana and Neinor Homes 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 Lar Espana with a short position of Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lar Espana and Neinor Homes.
Diversification Opportunities for Lar Espana and Neinor Homes
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lar and Neinor is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lar Espana Real and Neinor Homes SLU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SLU and Lar Espana 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 Lar Espana Real are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SLU has no effect on the direction of Lar Espana i.e., Lar Espana and Neinor Homes go up and down completely randomly.
Pair Corralation between Lar Espana and Neinor Homes
Assuming the 90 days trading horizon Lar Espana is expected to generate 1.72 times less return on investment than Neinor Homes. In addition to that, Lar Espana is 1.05 times more volatile than Neinor Homes SLU. It trades about 0.08 of its total potential returns per unit of risk. Neinor Homes SLU is currently generating about 0.14 per unit of volatility. If you would invest 902.00 in Neinor Homes SLU on August 27, 2024 and sell it today you would earn a total of 628.00 from holding Neinor Homes SLU or generate 69.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lar Espana Real vs. Neinor Homes SLU
Performance |
| Timeline |
| Lar Espana Real |
| Neinor Homes SLU |
Lar Espana and Neinor Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lar Espana and Neinor Homes
The main advantage of trading using opposite Lar Espana and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lar Espana position performs unexpectedly, Neinor Homes 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.| Lar Espana vs. Merlin Properties SOCIMI | Lar Espana vs. Inmobiliaria Colonial SA | Lar Espana vs. Cia de Distribucion | Lar Espana vs. ENCE Energa y |
| Neinor Homes vs. Aedas Homes SL | Neinor Homes vs. Metrovacesa SA | Neinor Homes vs. Merlin Properties SOCIMI | Neinor Homes vs. Lar Espana Real |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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