Correlation Between Repsol SA and BP Plc
Can any of the company-specific risk be diversified away by investing in both Repsol SA and BP Plc 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 SA and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Repsol SA and BP plc, you can compare the effects of market volatilities on Repsol SA and BP Plc 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 SA with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repsol SA and BP Plc.
Diversification Opportunities for Repsol SA and BP Plc
Pay attention - limited upside
The 3 months correlation between Repsol and BPAQF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Repsol SA and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and Repsol SA 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 SA are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Repsol SA i.e., Repsol SA and BP Plc go up and down completely randomly.
Pair Corralation between Repsol SA and BP Plc
If you would invest 514.00 in BP plc on December 10, 2024 and sell it today you would earn a total of 28.00 from holding BP plc or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Repsol SA vs. BP plc
Performance |
| Timeline |
| Repsol SA |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| BP plc |
Repsol SA and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Repsol SA and BP Plc
The main advantage of trading using opposite Repsol SA and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repsol SA position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.The idea behind Repsol SA and BP plc 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.| BP Plc vs. Unit Corporation | ||
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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