Correlation Between Mapfre and Redeia Corporacion
Can any of the company-specific risk be diversified away by investing in both Mapfre and Redeia Corporacion 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 Redeia Corporacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mapfre and Redeia Corporacion SA, you can compare the effects of market volatilities on Mapfre and Redeia Corporacion 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 Redeia Corporacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapfre and Redeia Corporacion.
Diversification Opportunities for Mapfre and Redeia Corporacion
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mapfre and Redeia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and Redeia Corporacion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redeia Corporacion 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 Redeia Corporacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redeia Corporacion has no effect on the direction of Mapfre i.e., Mapfre and Redeia Corporacion go up and down completely randomly.
Pair Corralation between Mapfre and Redeia Corporacion
Assuming the 90 days trading horizon Mapfre is expected to under-perform the Redeia Corporacion. But the stock apears to be less risky and, when comparing its historical volatility, Mapfre is 1.32 times less risky than Redeia Corporacion. The stock trades about -0.17 of its potential returns per unit of risk. The Redeia Corporacion SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,648 in Redeia Corporacion SA on August 31, 2024 and sell it today you would earn a total of 61.00 from holding Redeia Corporacion SA or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mapfre vs. Redeia Corporacion SA
Performance |
| Timeline |
| Mapfre |
| Redeia Corporacion |
Mapfre and Redeia Corporacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mapfre and Redeia Corporacion
The main advantage of trading using opposite Mapfre and Redeia Corporacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mapfre position performs unexpectedly, Redeia Corporacion 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 Redeia Corporacion will offset losses from the drop in Redeia Corporacion's long position.The idea behind Mapfre and Redeia Corporacion SA 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.| Redeia Corporacion vs. Metrovacesa SA | Redeia Corporacion vs. Elecnor SA | Redeia Corporacion vs. Mapfre | Redeia Corporacion vs. Tander Inversiones SOCIMI |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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