Correlation Between PSI 20 and Benfica
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By analyzing existing cross correlation between PSI 20 Stock and Benfica, you can compare the effects of market volatilities on PSI 20 and Benfica 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 PSI 20 with a short position of Benfica. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSI 20 and Benfica.
Diversification Opportunities for PSI 20 and Benfica
Very weak diversification
The 3 months correlation between PSI and Benfica is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PSI 20 Stock and Benfica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benfica and PSI 20 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 PSI 20 Stock are associated (or correlated) with Benfica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benfica has no effect on the direction of PSI 20 i.e., PSI 20 and Benfica go up and down completely randomly.
Pair Corralation between PSI 20 and Benfica
Assuming the 90 days trading horizon PSI 20 Stock is expected to generate 0.33 times more return on investment than Benfica. However, PSI 20 Stock is 3.01 times less risky than Benfica. It trades about 0.03 of its potential returns per unit of risk. Benfica is currently generating about 0.0 per unit of risk. If you would invest 579,305 in PSI 20 Stock on September 3, 2024 and sell it today you would earn a total of 62,529 from holding PSI 20 Stock or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PSI 20 Stock vs. Benfica
Performance |
| Timeline |
PSI 20 and Benfica Volatility Contrast
Predicted Return Density |
| Returns |
Benfica
Pair trading matchups for Benfica
Pair Trading with PSI 20 and Benfica
The main advantage of trading using opposite PSI 20 and Benfica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSI 20 position performs unexpectedly, Benfica 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 Benfica will offset losses from the drop in Benfica's long position.The idea behind PSI 20 Stock and Benfica pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Benfica vs. Futebol Clube do | Benfica vs. Sporting Clube de | Benfica vs. Martifer SGPS SA | Benfica vs. Corticeira Amorim |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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