Correlation Between Mapfre and Home Capital
Can any of the company-specific risk be diversified away by investing in both Mapfre and Home Capital 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 Home Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mapfre and Home Capital Rentals, you can compare the effects of market volatilities on Mapfre and Home Capital 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 Home Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapfre and Home Capital.
Diversification Opportunities for Mapfre and Home Capital
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mapfre and Home is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and Home Capital Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Capital Rentals 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 Home Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Capital Rentals has no effect on the direction of Mapfre i.e., Mapfre and Home Capital go up and down completely randomly.
Pair Corralation between Mapfre and Home Capital
Assuming the 90 days trading horizon Mapfre is expected to generate 0.78 times more return on investment than Home Capital. However, Mapfre is 1.28 times less risky than Home Capital. It trades about 0.03 of its potential returns per unit of risk. Home Capital Rentals is currently generating about -0.22 per unit of risk. If you would invest 257.00 in Mapfre on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Mapfre or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mapfre vs. Home Capital Rentals
Performance |
| Timeline |
| Mapfre |
| Home Capital Rentals |
Mapfre and Home Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mapfre and Home Capital
The main advantage of trading using opposite Mapfre and Home Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mapfre position performs unexpectedly, Home Capital 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 Home Capital will offset losses from the drop in Home Capital's long position.| Mapfre vs. Home Capital Rentals | Mapfre vs. Energy Solar Tech | Mapfre vs. Arteche Lantegi Elkartea | Mapfre vs. Ebro Foods |
| Home Capital vs. All Iron Re | Home Capital vs. International Consolidated Airlines | Home Capital vs. Arteche Lantegi Elkartea | Home Capital vs. Caixabank 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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