Correlation Between Metrovacesa and Ferrovial
Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Ferrovial 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 Ferrovial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrovacesa SA and Ferrovial, you can compare the effects of market volatilities on Metrovacesa and Ferrovial 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 Ferrovial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Ferrovial.
Diversification Opportunities for Metrovacesa and Ferrovial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metrovacesa and Ferrovial is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Ferrovial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial 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 Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial has no effect on the direction of Metrovacesa i.e., Metrovacesa and Ferrovial go up and down completely randomly.
Pair Corralation between Metrovacesa and Ferrovial
Assuming the 90 days trading horizon Metrovacesa is expected to generate 3.32 times less return on investment than Ferrovial. But when comparing it to its historical volatility, Metrovacesa SA is 1.28 times less risky than Ferrovial. It trades about 0.15 of its potential returns per unit of risk. Ferrovial is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,662 in Ferrovial on September 12, 2024 and sell it today you would earn a total of 392.00 from holding Ferrovial or generate 10.7% 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. Ferrovial
Performance |
| Timeline |
| Metrovacesa SA |
| Ferrovial |
Metrovacesa and Ferrovial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Ferrovial
The main advantage of trading using opposite Metrovacesa and Ferrovial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Ferrovial 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 Ferrovial will offset losses from the drop in Ferrovial's long position.| Metrovacesa vs. Neinor Homes SLU | Metrovacesa vs. Merlin Properties SOCIMI | Metrovacesa 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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