Correlation Between Acciona and Corporacion Acciona

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

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

Diversification Opportunities for Acciona and Corporacion Acciona

0.9

Correlation Coefficient

Acciona  Corporacion Acciona

Almost no diversification

The 3 months correlation between Acciona and Corporacion is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Acciona and Corporacion Acciona Energias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion Acciona and Acciona 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 Acciona are associated (or correlated) with Corporacion Acciona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion Acciona has no effect on the direction of Acciona i.e., Acciona and Corporacion Acciona go up and down completely randomly.

Pair Corralation between Acciona and Corporacion Acciona

Assuming the 90 days trading horizon Acciona is expected to under-perform the Corporacion Acciona. But the stock apears to be less risky and, when comparing its historical volatility, Acciona is 1.04 times less risky than Corporacion Acciona. The stock trades about -0.01 of its potential returns per unit of risk. The Corporacion Acciona Energias is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,080  in Corporacion Acciona Energias on September 2, 2024 and sell it today you would lose (52.00) from holding Corporacion Acciona Energias or give up 2.5% of portfolio value over 90 days.

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

Acciona  vs.  Corporacion Acciona Energias

Acciona

Risk-Adjusted Performance

0 of 100

Very Weak

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

Corporacion Acciona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporacion Acciona Energias has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Corporacion Acciona is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Acciona and Corporacion Acciona

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

The idea behind Acciona and Corporacion Acciona Energias 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.