Correlation Between Home Capital and Aena SA
Can any of the company-specific risk be diversified away by investing in both Home Capital and Aena 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 Home Capital and Aena SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and Aena SA, you can compare the effects of market volatilities on Home Capital and Aena 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 Home Capital with a short position of Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Aena SA.
Diversification Opportunities for Home Capital and Aena SA
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Home and Aena is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and Home Capital 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 Home Capital Rentals are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of Home Capital i.e., Home Capital and Aena SA go up and down completely randomly.
Pair Corralation between Home Capital and Aena SA
Assuming the 90 days trading horizon Home Capital Rentals is expected to under-perform the Aena SA. But the stock apears to be less risky and, when comparing its historical volatility, Home Capital Rentals is 1.48 times less risky than Aena SA. The stock trades about -0.01 of its potential returns per unit of risk. The Aena SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15,798 in Aena SA on October 22, 2024 and sell it today you would earn a total of 4,222 from holding Aena SA or generate 26.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.75% |
| Values | Daily Returns |
Home Capital Rentals vs. Aena SA
Performance |
| Timeline |
| Home Capital Rentals |
| Aena SA |
Home Capital and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Capital and Aena SA
The main advantage of trading using opposite Home Capital and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, Aena 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 Aena SA will offset losses from the drop in Aena SA's long position.| Home Capital vs. Elaia Investment Spain | Home Capital vs. Vytrus Biotech SA | Home Capital vs. Azaria Rental SOCIMI | Home Capital vs. Ebro Foods |
| Aena SA vs. Bankinter | Aena SA vs. Energy Solar Tech | Aena SA vs. Plasticos Compuestos SA | Aena SA vs. Home Capital Rentals |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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