Correlation Between Metrovacesa and Corporacion Financiera
Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Corporacion Financiera 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 Corporacion Financiera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrovacesa SA and Corporacion Financiera Alba, you can compare the effects of market volatilities on Metrovacesa and Corporacion Financiera 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 Corporacion Financiera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Corporacion Financiera.
Diversification Opportunities for Metrovacesa and Corporacion Financiera
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metrovacesa and Corporacion is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Corporacion Financiera Alba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion Financiera 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 Corporacion Financiera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion Financiera has no effect on the direction of Metrovacesa i.e., Metrovacesa and Corporacion Financiera go up and down completely randomly.
Pair Corralation between Metrovacesa and Corporacion Financiera
Assuming the 90 days trading horizon Metrovacesa SA is expected to generate 1.35 times more return on investment than Corporacion Financiera. However, Metrovacesa is 1.35 times more volatile than Corporacion Financiera Alba. It trades about 0.14 of its potential returns per unit of risk. Corporacion Financiera Alba is currently generating about -0.08 per unit of risk. If you would invest 851.00 in Metrovacesa SA on September 1, 2024 and sell it today you would earn a total of 22.00 from holding Metrovacesa SA or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Metrovacesa SA vs. Corporacion Financiera Alba
Performance |
| Timeline |
| Metrovacesa SA |
| Corporacion Financiera |
Metrovacesa and Corporacion Financiera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Corporacion Financiera
The main advantage of trading using opposite Metrovacesa and Corporacion Financiera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Corporacion Financiera 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 Corporacion Financiera will offset losses from the drop in Corporacion Financiera's long position.| Metrovacesa vs. NH Hoteles | Metrovacesa vs. Fomento de Construcciones | Metrovacesa vs. Inmobiliaria Colonial SA | Metrovacesa vs. Indra A |
| Corporacion Financiera vs. Banco de Sabadell | Corporacion Financiera vs. Caixabank SA | Corporacion Financiera vs. Acerinox | Corporacion Financiera vs. ACS Actividades 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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