Correlation Between Metrovacesa and Neinor Homes
Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Neinor 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 Neinor 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 Neinor Homes SLU, you can compare the effects of market volatilities on Metrovacesa and Neinor 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 Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Neinor Homes.
Diversification Opportunities for Metrovacesa and Neinor Homes
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metrovacesa and Neinor is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Neinor Homes SLU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SLU 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 Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SLU has no effect on the direction of Metrovacesa i.e., Metrovacesa and Neinor Homes go up and down completely randomly.
Pair Corralation between Metrovacesa and Neinor Homes
Assuming the 90 days trading horizon Metrovacesa SA is expected to under-perform the Neinor Homes. But the stock apears to be less risky and, when comparing its historical volatility, Metrovacesa SA is 3.52 times less risky than Neinor Homes. The stock trades about -0.11 of its potential returns per unit of risk. The Neinor Homes SLU is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,628 in Neinor Homes SLU on October 22, 2024 and sell it today you would earn a total of 56.00 from holding Neinor Homes SLU or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Metrovacesa SA vs. Neinor Homes SLU
Performance |
| Timeline |
| Metrovacesa SA |
| Neinor Homes SLU |
Metrovacesa and Neinor Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Neinor Homes
The main advantage of trading using opposite Metrovacesa and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Neinor 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.| Metrovacesa vs. NH Hoteles | Metrovacesa vs. Fomento de Construcciones | Metrovacesa vs. Inmobiliaria Colonial SA | Metrovacesa vs. Aedas Homes SL |
| Neinor Homes vs. Aedas Homes SL | Neinor Homes vs. Metrovacesa SA | Neinor Homes vs. Merlin Properties SOCIMI | Neinor 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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