Correlation Between All Iron and Merlin Properties
Can any of the company-specific risk be diversified away by investing in both All Iron and Merlin Properties 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 All Iron and Merlin Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All Iron Re and Merlin Properties SOCIMI, you can compare the effects of market volatilities on All Iron and Merlin Properties 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 All Iron with a short position of Merlin Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of All Iron and Merlin Properties.
Diversification Opportunities for All Iron and Merlin Properties
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between All and Merlin is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding All Iron Re and Merlin Properties SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merlin Properties SOCIMI and All Iron 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 All Iron Re are associated (or correlated) with Merlin Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merlin Properties SOCIMI has no effect on the direction of All Iron i.e., All Iron and Merlin Properties go up and down completely randomly.
Pair Corralation between All Iron and Merlin Properties
Assuming the 90 days trading horizon All Iron is expected to generate 2.16 times less return on investment than Merlin Properties. In addition to that, All Iron is 1.24 times more volatile than Merlin Properties SOCIMI. It trades about 0.01 of its total potential returns per unit of risk. Merlin Properties SOCIMI is currently generating about 0.04 per unit of volatility. If you would invest 837.00 in Merlin Properties SOCIMI on October 23, 2024 and sell it today you would earn a total of 228.00 from holding Merlin Properties SOCIMI or generate 27.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
All Iron Re vs. Merlin Properties SOCIMI
Performance |
| Timeline |
| All Iron Re |
| Merlin Properties SOCIMI |
All Iron and Merlin Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All Iron and Merlin Properties
The main advantage of trading using opposite All Iron and Merlin Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All Iron position performs unexpectedly, Merlin Properties 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 Merlin Properties will offset losses from the drop in Merlin Properties' long position.| All Iron vs. Merlin Properties SOCIMI | All Iron vs. GMP Property SOCIMI | All Iron vs. Elaia Investment Spain |
| Merlin Properties vs. Elaia Investment Spain | Merlin Properties vs. Squirrel Media SA | Merlin Properties vs. All Iron Re | Merlin Properties vs. Cellnex Telecom SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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