Correlation Between Aena SME and Vanguard Funds

Can any of the company-specific risk be diversified away by investing in both Aena SME and Vanguard Funds 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 Aena SME and Vanguard Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aena SME SA and Vanguard Funds Public, you can compare the effects of market volatilities on Aena SME and Vanguard Funds 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 Aena SME with a short position of Vanguard Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SME and Vanguard Funds.

Diversification Opportunities for Aena SME and Vanguard Funds

-0.41

Correlation Coefficient

Aena SME  Vanguard Funds

Very good diversification

The 3 months correlation between Aena and Vanguard is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aena SME SA and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public and Aena SME 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 Aena SME SA are associated (or correlated) with Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Aena SME i.e., Aena SME and Vanguard Funds go up and down completely randomly.

Pair Corralation between Aena SME and Vanguard Funds

Assuming the 90 days horizon Aena SME SA is expected to generate 1.21 times more return on investment than Vanguard Funds. However, Aena SME is 1.21 times more volatile than Vanguard Funds Public. It trades about 0.14 of its potential returns per unit of risk. Vanguard Funds Public is currently generating about -0.1 per unit of risk. If you would invest  19,790  in Aena SME SA on December 29, 2024 and sell it today you would earn a total of  2,090  from holding Aena SME SA or generate 10.56% return on investment over 90 days.

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

Aena SME SA  vs.  Vanguard Funds Public

Aena SME SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aena SME may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vanguard Funds Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Funds Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Aena SME and Vanguard Funds

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

The idea behind Aena SME SA and Vanguard Funds Public 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.