Correlation Between Metrovacesa and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Metrovacesa 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 Metrovacesa and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrovacesa SA and Aedas Homes SL, you can compare the effects of market volatilities on Metrovacesa 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 Metrovacesa with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Aedas Homes.
Diversification Opportunities for Metrovacesa and Aedas Homes
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metrovacesa and Aedas is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA 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 Metrovacesa 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 Metrovacesa SA 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 Metrovacesa i.e., Metrovacesa and Aedas Homes go up and down completely randomly.
Pair Corralation between Metrovacesa and Aedas Homes
Assuming the 90 days trading horizon Metrovacesa is expected to generate 2.71 times less return on investment than Aedas Homes. But when comparing it to its historical volatility, Metrovacesa SA is 1.4 times less risky than Aedas Homes. It trades about 0.07 of its potential returns per unit of risk. Aedas Homes SL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,048 in Aedas Homes SL on November 5, 2024 and sell it today you would earn a total of 1,937 from holding Aedas Homes SL or generate 184.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrovacesa SA vs. Aedas Homes SL
Performance |
| Timeline |
| Metrovacesa SA |
| Aedas Homes SL |
Metrovacesa and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Aedas Homes
The main advantage of trading using opposite Metrovacesa and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa 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.| Metrovacesa vs. NH Hoteles | Metrovacesa vs. Fomento de Construcciones | Metrovacesa vs. Inmobiliaria Colonial SA | Metrovacesa vs. Aedas Homes SL |
| Aedas Homes vs. Neinor Homes SLU | Aedas Homes vs. Metrovacesa SA | Aedas Homes vs. Merlin Properties SOCIMI | Aedas Homes vs. Lar Espana Real |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |