Correlation Between Badger Infrastructure and Acciona SA

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

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

Diversification Opportunities for Badger Infrastructure and Acciona SA

-0.17

Correlation Coefficient

Badger Infrastructure  Acciona SA

Good diversification

The 3 months correlation between Badger and Acciona is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Badger Infrastructure Solution and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and Badger Infrastructure 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 Badger Infrastructure Solutions are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Badger Infrastructure i.e., Badger Infrastructure and Acciona SA go up and down completely randomly.

Pair Corralation between Badger Infrastructure and Acciona SA

Assuming the 90 days horizon Badger Infrastructure Solutions is expected to generate 1.04 times more return on investment than Acciona SA. However, Badger Infrastructure is 1.04 times more volatile than Acciona SA. It trades about 0.02 of its potential returns per unit of risk. Acciona SA is currently generating about -0.07 per unit of risk. If you would invest  2,715  in Badger Infrastructure Solutions on September 2, 2024 and sell it today you would earn a total of  38.00  from holding Badger Infrastructure Solutions or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Badger Infrastructure Solution  vs.  Acciona SA

Badger Infrastructure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Badger Infrastructure Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Badger Infrastructure is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Acciona SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acciona SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Badger Infrastructure and Acciona SA

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

The idea behind Badger Infrastructure Solutions and Acciona 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.