Correlation Between Vinci SA and Acciona SA

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Can any of the company-specific risk be diversified away by investing in both Vinci SA and Acciona SA 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 Vinci SA and Acciona SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vinci SA ADR and Acciona SA, you can compare the effects of market volatilities on Vinci SA and Acciona SA 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 Vinci SA with a short position of Acciona SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci SA and Acciona SA.

Diversification Opportunities for Vinci SA and Acciona SA

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Vinci and Acciona is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA ADR and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and Vinci 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 Vinci SA ADR are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Vinci SA i.e., Vinci SA and Acciona SA go up and down completely randomly.

Pair Corralation between Vinci SA and Acciona SA

Assuming the 90 days horizon Vinci SA ADR is expected to generate 0.59 times more return on investment than Acciona SA. However, Vinci SA ADR is 1.69 times less risky than Acciona SA. It trades about 0.14 of its potential returns per unit of risk. Acciona SA is currently generating about 0.03 per unit of risk. If you would invest  2,721  in Vinci SA ADR on November 27, 2024 and sell it today you would earn a total of  120.00  from holding Vinci SA ADR or generate 4.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Vinci SA ADR  vs.  Acciona SA

 Performance 
       Timeline  
Vinci SA ADR 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Vinci SA ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vinci SA may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Acciona SA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Acciona SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Vinci SA and Acciona SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vinci SA and Acciona SA

The main advantage of trading using opposite Vinci SA and Acciona SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci SA position performs unexpectedly, Acciona SA 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 Acciona SA will offset losses from the drop in Acciona SA's long position.
The idea behind Vinci SA ADR and Acciona SA 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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