Correlation Between Mapfre and Cia De
Can any of the company-specific risk be diversified away by investing in both Mapfre and Cia De 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 Mapfre and Cia De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mapfre and Cia de Distribucion, you can compare the effects of market volatilities on Mapfre and Cia De 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 Mapfre with a short position of Cia De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapfre and Cia De.
Diversification Opportunities for Mapfre and Cia De
Good diversification
The 3 months correlation between Mapfre and Cia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and Cia de Distribucion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia de Distribucion and Mapfre 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 Mapfre are associated (or correlated) with Cia De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia de Distribucion has no effect on the direction of Mapfre i.e., Mapfre and Cia De go up and down completely randomly.
Pair Corralation between Mapfre and Cia De
Assuming the 90 days trading horizon Mapfre is expected to generate 1.34 times more return on investment than Cia De. However, Mapfre is 1.34 times more volatile than Cia de Distribucion. It trades about 0.11 of its potential returns per unit of risk. Cia de Distribucion is currently generating about 0.07 per unit of risk. If you would invest 192.00 in Mapfre on November 3, 2024 and sell it today you would earn a total of 77.00 from holding Mapfre or generate 40.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mapfre vs. Cia de Distribucion
Performance |
| Timeline |
| Mapfre |
| Cia de Distribucion |
Mapfre and Cia De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mapfre and Cia De
The main advantage of trading using opposite Mapfre and Cia De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mapfre position performs unexpectedly, Cia De 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 Cia De will offset losses from the drop in Cia De's long position.The idea behind Mapfre and Cia de Distribucion 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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