Correlation Between Merlin Properties and Endesa SA
Can any of the company-specific risk be diversified away by investing in both Merlin Properties and Endesa SA 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 Endesa SA 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 Endesa SA, you can compare the effects of market volatilities on Merlin Properties and Endesa SA 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 Endesa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Endesa SA.
Diversification Opportunities for Merlin Properties and Endesa SA
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merlin and Endesa is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Endesa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endesa SA 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 Endesa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endesa SA has no effect on the direction of Merlin Properties i.e., Merlin Properties and Endesa SA go up and down completely randomly.
Pair Corralation between Merlin Properties and Endesa SA
Assuming the 90 days trading horizon Merlin Properties SOCIMI is expected to generate 1.3 times more return on investment than Endesa SA. However, Merlin Properties is 1.3 times more volatile than Endesa SA. It trades about 0.06 of its potential returns per unit of risk. Endesa SA is currently generating about 0.03 per unit of risk. If you would invest 787.00 in Merlin Properties SOCIMI on August 31, 2024 and sell it today you would earn a total of 253.00 from holding Merlin Properties SOCIMI or generate 32.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merlin Properties SOCIMI vs. Endesa SA
Performance |
| Timeline |
| Merlin Properties SOCIMI |
| Endesa SA |
Merlin Properties and Endesa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merlin Properties and Endesa SA
The main advantage of trading using opposite Merlin Properties and Endesa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merlin Properties position performs unexpectedly, Endesa SA 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 Endesa SA will offset losses from the drop in Endesa SA's long position.| Merlin Properties vs. NH Hoteles | Merlin Properties vs. Fomento de Construcciones | Merlin Properties vs. Inmobiliaria Colonial SA | Merlin Properties vs. Aedas Homes SL |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |