Correlation Between Acciona and Indra A

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

By analyzing existing cross correlation between Acciona and Indra A, you can compare the effects of market volatilities on Acciona and Indra A 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 Indra A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acciona and Indra A.

Diversification Opportunities for Acciona and Indra A

0.15

Correlation Coefficient

Acciona  Indra A

Average diversification

The 3 months correlation between Acciona and Indra is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Acciona and Indra A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indra A 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 Indra A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indra A has no effect on the direction of Acciona i.e., Acciona and Indra A go up and down completely randomly.

Pair Corralation between Acciona and Indra A

Assuming the 90 days trading horizon Acciona is expected to under-perform the Indra A. In addition to that, Acciona is 1.42 times more volatile than Indra A. It trades about -0.05 of its total potential returns per unit of risk. Indra A is currently generating about 0.02 per unit of volatility. If you would invest  1,652  in Indra A on September 5, 2024 and sell it today you would earn a total of  26.00  from holding Indra A or generate 1.57% return on investment over 90 days.

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

Acciona  vs.  Indra A

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.

Indra A

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indra A are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Indra A 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 Indra A

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

The idea behind Acciona and Indra A 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.