Correlation Between Metrovacesa and Redeia Corporacion
Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Redeia Corporacion 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 Redeia Corporacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrovacesa SA and Redeia Corporacion SA, you can compare the effects of market volatilities on Metrovacesa and Redeia Corporacion 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 Redeia Corporacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Redeia Corporacion.
Diversification Opportunities for Metrovacesa and Redeia Corporacion
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metrovacesa and Redeia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Redeia Corporacion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redeia Corporacion 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 Redeia Corporacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redeia Corporacion has no effect on the direction of Metrovacesa i.e., Metrovacesa and Redeia Corporacion go up and down completely randomly.
Pair Corralation between Metrovacesa and Redeia Corporacion
Assuming the 90 days trading horizon Metrovacesa is expected to generate 1.52 times less return on investment than Redeia Corporacion. But when comparing it to its historical volatility, Metrovacesa SA is 1.36 times less risky than Redeia Corporacion. It trades about 0.12 of its potential returns per unit of risk. Redeia Corporacion SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,648 in Redeia Corporacion SA on August 31, 2024 and sell it today you would earn a total of 61.00 from holding Redeia Corporacion SA or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Metrovacesa SA vs. Redeia Corporacion SA
Performance |
| Timeline |
| Metrovacesa SA |
| Redeia Corporacion |
Metrovacesa and Redeia Corporacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Redeia Corporacion
The main advantage of trading using opposite Metrovacesa and Redeia Corporacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Redeia Corporacion 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 Redeia Corporacion will offset losses from the drop in Redeia Corporacion's long position.| Metrovacesa vs. NH Hoteles | Metrovacesa vs. Fomento de Construcciones | Metrovacesa vs. Inmobiliaria Colonial SA | Metrovacesa vs. Aedas Homes SL |
| Redeia Corporacion vs. Metrovacesa SA | Redeia Corporacion vs. Elecnor SA | Redeia Corporacion vs. Mapfre | Redeia Corporacion vs. Tander Inversiones SOCIMI |
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 Stocks Directory module to find actively traded stocks across global markets.
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