Correlation Between Merlin Properties and Renta Corporacion
Can any of the company-specific risk be diversified away by investing in both Merlin Properties and Renta 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 Merlin Properties and Renta Corporacion 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 Renta Corporacion Real, you can compare the effects of market volatilities on Merlin Properties and Renta 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 Merlin Properties with a short position of Renta Corporacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Renta Corporacion.
Diversification Opportunities for Merlin Properties and Renta Corporacion
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merlin and Renta is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Renta Corporacion Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renta Corporacion Real 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 Renta Corporacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renta Corporacion Real has no effect on the direction of Merlin Properties i.e., Merlin Properties and Renta Corporacion go up and down completely randomly.
Pair Corralation between Merlin Properties and Renta Corporacion
Assuming the 90 days trading horizon Merlin Properties SOCIMI is expected to generate 0.72 times more return on investment than Renta Corporacion. However, Merlin Properties SOCIMI is 1.4 times less risky than Renta Corporacion. It trades about 0.04 of its potential returns per unit of risk. Renta Corporacion Real is currently generating about -0.05 per unit of risk. If you would invest 828.00 in Merlin Properties SOCIMI on September 14, 2024 and sell it today you would earn a total of 207.00 from holding Merlin Properties SOCIMI or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Merlin Properties SOCIMI vs. Renta Corporacion Real
Performance |
| Timeline |
| Merlin Properties SOCIMI |
| Renta Corporacion Real |
Merlin Properties and Renta Corporacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merlin Properties and Renta Corporacion
The main advantage of trading using opposite Merlin Properties and Renta Corporacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merlin Properties position performs unexpectedly, Renta 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 Renta Corporacion will offset losses from the drop in Renta Corporacion's long position.| Merlin Properties vs. Elaia Investment Spain | Merlin Properties vs. Caixabank SA | Merlin Properties vs. Melia Hotels | Merlin Properties vs. Aedas Homes SL |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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