Correlation Between NEW MILLENNIUM and Covivio SA

Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM and Covivio 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 NEW MILLENNIUM and Covivio SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NEW MILLENNIUM IRON and Covivio SA, you can compare the effects of market volatilities on NEW MILLENNIUM and Covivio 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 NEW MILLENNIUM with a short position of Covivio SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and Covivio SA.

Diversification Opportunities for NEW MILLENNIUM and Covivio SA

-0.29

Correlation Coefficient

NEW MILLENNIUM  Covivio SA

Very good diversification

The 3 months correlation between NEW and Covivio is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA and NEW MILLENNIUM 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 NEW MILLENNIUM IRON are associated (or correlated) with Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of NEW MILLENNIUM i.e., NEW MILLENNIUM and Covivio SA go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and Covivio SA

Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to under-perform the Covivio SA. In addition to that, NEW MILLENNIUM is 1.51 times more volatile than Covivio SA. It trades about -0.04 of its total potential returns per unit of risk. Covivio SA is currently generating about 0.05 per unit of volatility. If you would invest  4,522  in Covivio SA on October 4, 2024 and sell it today you would earn a total of  376.00  from holding Covivio SA or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NEW MILLENNIUM IRON  vs.  Covivio SA

NEW MILLENNIUM IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW MILLENNIUM IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, NEW MILLENNIUM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Covivio SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covivio SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NEW MILLENNIUM and Covivio SA

The main advantage of trading using opposite NEW MILLENNIUM and Covivio SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM position performs unexpectedly, Covivio 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 Covivio SA will offset losses from the drop in Covivio SA's long position.

The idea behind NEW MILLENNIUM IRON and Covivio 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.