Correlation Between Repsol and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Repsol and International Consolidated 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 Repsol and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Repsol and International Consolidated Airlines, you can compare the effects of market volatilities on Repsol and International Consolidated 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 Repsol with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repsol and International Consolidated.
Diversification Opportunities for Repsol and International Consolidated
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Repsol and International is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Repsol 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 Repsol are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Repsol i.e., Repsol and International Consolidated go up and down completely randomly.
Pair Corralation between Repsol and International Consolidated
Assuming the 90 days trading horizon Repsol is expected to generate 43.5 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Repsol is 1.6 times less risky than International Consolidated. It trades about 0.02 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 252.00 in International Consolidated Airlines on August 31, 2024 and sell it today you would earn a total of 61.00 from holding International Consolidated Airlines or generate 24.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Repsol vs. International Consolidated Air
Performance |
| Timeline |
| Repsol |
| International Consolidated |
Repsol and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Repsol and International Consolidated
The main advantage of trading using opposite Repsol and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repsol position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.The idea behind Repsol and International Consolidated Airlines 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.| International Consolidated vs. Lyxor UCITS Ibex35 | International Consolidated vs. Metrovacesa SA | International Consolidated vs. Hispanotels Inversiones SOCIMI | International Consolidated vs. Mapfre |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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