Correlation Between Metrovacesa and Mapfre
Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Mapfre 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 Mapfre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrovacesa SA and Mapfre, you can compare the effects of market volatilities on Metrovacesa and Mapfre 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 Mapfre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Mapfre.
Diversification Opportunities for Metrovacesa and Mapfre
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metrovacesa and Mapfre is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre 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 Mapfre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre has no effect on the direction of Metrovacesa i.e., Metrovacesa and Mapfre go up and down completely randomly.
Pair Corralation between Metrovacesa and Mapfre
Assuming the 90 days trading horizon Metrovacesa is expected to generate 2.71 times less return on investment than Mapfre. But when comparing it to its historical volatility, Metrovacesa SA is 1.66 times less risky than Mapfre. It trades about 0.09 of its potential returns per unit of risk. Mapfre is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 248.00 in Mapfre on August 24, 2024 and sell it today you would earn a total of 11.00 from holding Mapfre or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrovacesa SA vs. Mapfre
Performance |
| Timeline |
| Metrovacesa SA |
| Mapfre |
Metrovacesa and Mapfre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Mapfre
The main advantage of trading using opposite Metrovacesa and Mapfre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Mapfre 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 Mapfre will offset losses from the drop in Mapfre's long position.| Metrovacesa vs. NH Hoteles | Metrovacesa vs. Fomento de Construcciones | Metrovacesa vs. Inmobiliaria Colonial SA | Metrovacesa vs. Aedas Homes SL |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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