Correlation Between Aena SA and Ferrovial

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

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

Diversification Opportunities for Aena SA and Ferrovial

0.77

Correlation Coefficient

Aena SA  Ferrovial

Poor diversification

The 3 months correlation between Aena and Ferrovial is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and Ferrovial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SA and Aena SA 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 SA are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SA has no effect on the direction of Aena SA i.e., Aena SA and Ferrovial go up and down completely randomly.

Pair Corralation between Aena SA and Ferrovial

Assuming the 90 days trading horizon Aena SA is expected to generate 1.84 times less return on investment than Ferrovial. In addition to that, Aena SA is 1.05 times more volatile than Ferrovial SA. It trades about 0.04 of its total potential returns per unit of risk. Ferrovial SA is currently generating about 0.08 per unit of volatility. If you would invest  4,061  in Ferrovial SA on December 4, 2024 and sell it today you would earn a total of  193.00  from holding Ferrovial SA or generate 4.75% return on investment over 90 days.

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

Aena SA  vs.  Ferrovial SA

Aena SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Aena SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ferrovial SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrovial SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ferrovial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aena SA and Ferrovial

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

The idea behind Aena SA and Ferrovial 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.