Correlation Between Meridia Real and Metrovacesa
Can any of the company-specific risk be diversified away by investing in both Meridia Real and Metrovacesa 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 Meridia Real and Metrovacesa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridia Real Estate and Metrovacesa SA, you can compare the effects of market volatilities on Meridia Real and Metrovacesa 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 Meridia Real with a short position of Metrovacesa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridia Real and Metrovacesa.
Diversification Opportunities for Meridia Real and Metrovacesa
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meridia and Metrovacesa is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Meridia Real Estate and Metrovacesa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrovacesa SA and Meridia Real 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 Meridia Real Estate are associated (or correlated) with Metrovacesa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrovacesa SA has no effect on the direction of Meridia Real i.e., Meridia Real and Metrovacesa go up and down completely randomly.
Pair Corralation between Meridia Real and Metrovacesa
Assuming the 90 days trading horizon Meridia Real Estate is expected to generate 2.5 times more return on investment than Metrovacesa. However, Meridia Real is 2.5 times more volatile than Metrovacesa SA. It trades about 0.24 of its potential returns per unit of risk. Metrovacesa SA is currently generating about 0.08 per unit of risk. If you would invest 79.00 in Meridia Real Estate on September 5, 2024 and sell it today you would earn a total of 8.00 from holding Meridia Real Estate or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridia Real Estate vs. Metrovacesa SA
Performance |
| Timeline |
| Meridia Real Estate |
| Metrovacesa SA |
Meridia Real and Metrovacesa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridia Real and Metrovacesa
The main advantage of trading using opposite Meridia Real and Metrovacesa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridia Real position performs unexpectedly, Metrovacesa 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 Metrovacesa will offset losses from the drop in Metrovacesa's long position.| Meridia Real vs. Metrovacesa SA | Meridia Real vs. Elecnor SA | Meridia Real vs. Mapfre | Meridia Real vs. Amper 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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