Correlation Between Merlin Properties and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Merlin Properties and Aedas 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 Merlin Properties and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merlin Properties SOCIMI and Aedas Homes SL, you can compare the effects of market volatilities on Merlin Properties and Aedas 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 Merlin Properties with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Aedas Homes.
Diversification Opportunities for Merlin Properties and Aedas Homes
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merlin and Aedas is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Aedas Homes SL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SL and Merlin Properties 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 Merlin Properties SOCIMI are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SL has no effect on the direction of Merlin Properties i.e., Merlin Properties and Aedas Homes go up and down completely randomly.
Pair Corralation between Merlin Properties and Aedas Homes
Assuming the 90 days trading horizon Merlin Properties is expected to generate 2.55 times less return on investment than Aedas Homes. In addition to that, Merlin Properties is 1.02 times more volatile than Aedas Homes SL. It trades about 0.08 of its total potential returns per unit of risk. Aedas Homes SL is currently generating about 0.2 per unit of volatility. If you would invest 2,408 in Aedas Homes SL on October 26, 2024 and sell it today you would earn a total of 347.00 from holding Aedas Homes SL or generate 14.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merlin Properties SOCIMI vs. Aedas Homes SL
Performance |
| Timeline |
| Merlin Properties SOCIMI |
| Aedas Homes SL |
Merlin Properties and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merlin Properties and Aedas Homes
The main advantage of trading using opposite Merlin Properties and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merlin Properties position performs unexpectedly, Aedas 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Merlin Properties vs. Cellnex Telecom SA | Merlin Properties vs. Atrys Health SL | Merlin Properties vs. Elaia Investment Spain | Merlin Properties vs. Atresmedia Corporacin de |
| Aedas Homes vs. Neinor Homes SLU | Aedas Homes vs. Metrovacesa SA | Aedas Homes vs. Merlin Properties SOCIMI | Aedas Homes vs. Atresmedia Corporacin de |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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