Correlation Between Duro Felguera and Home Capital
Can any of the company-specific risk be diversified away by investing in both Duro Felguera 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 Duro Felguera and Home Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duro Felguera and Home Capital Rentals, you can compare the effects of market volatilities on Duro Felguera 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 Duro Felguera with a short position of Home Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duro Felguera and Home Capital.
Diversification Opportunities for Duro Felguera and Home Capital
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Duro and Home is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Duro Felguera 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 Duro Felguera 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 Duro Felguera 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 Duro Felguera i.e., Duro Felguera and Home Capital go up and down completely randomly.
Pair Corralation between Duro Felguera and Home Capital
Assuming the 90 days trading horizon Duro Felguera is expected to generate 5.29 times more return on investment than Home Capital. However, Duro Felguera is 5.29 times more volatile than Home Capital Rentals. It trades about 0.0 of its potential returns per unit of risk. Home Capital Rentals is currently generating about -0.03 per unit of risk. If you would invest 58.00 in Duro Felguera on September 3, 2024 and sell it today you would lose (8.00) from holding Duro Felguera or give up 13.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.79% |
| Values | Daily Returns |
Duro Felguera vs. Home Capital Rentals
Performance |
| Timeline |
| Duro Felguera |
| Home Capital Rentals |
Duro Felguera and Home Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duro Felguera and Home Capital
The main advantage of trading using opposite Duro Felguera and Home Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duro Felguera 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.| Duro Felguera vs. Cia de Distribucion | Duro Felguera vs. ENCE Energa y | Duro Felguera vs. Acerinox | Duro Felguera vs. Mapfre |
| Home Capital vs. Airbus Group SE | Home Capital vs. Industria de Diseno | Home Capital vs. Vale SA | Home Capital vs. Iberdrola 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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