Correlation Between Universal and Aena SME
Can any of the company-specific risk be diversified away by investing in both Universal and Aena SME 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 Universal and Aena SME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Aena SME SA, you can compare the effects of market volatilities on Universal and Aena SME 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 Universal with a short position of Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Aena SME.
Diversification Opportunities for Universal and Aena SME
Very good diversification
The 3 months correlation between Universal and Aena is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA and Universal 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 Universal are associated (or correlated) with Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Universal i.e., Universal and Aena SME go up and down completely randomly.
Pair Corralation between Universal and Aena SME
Considering the 90-day investment horizon Universal is expected to generate 1.28 times more return on investment than Aena SME. However, Universal is 1.28 times more volatile than Aena SME SA. It trades about 0.37 of its potential returns per unit of risk. Aena SME SA is currently generating about -0.22 per unit of risk. If you would invest 5,005 in Universal on August 29, 2024 and sell it today you would earn a total of 654.00 from holding Universal or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. Aena SME SA
Performance |
| Timeline |
| Universal |
| Aena SME SA |
Universal and Aena SME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Aena SME
The main advantage of trading using opposite Universal and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal position performs unexpectedly, Aena SME 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 Aena SME will offset losses from the drop in Aena SME's long position.| Universal vs. Imperial Brands PLC | Universal vs. Philip Morris International | Universal vs. Japan Tobacco ADR | Universal vs. Imperial Brands PLC |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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