Correlation Between Big Shopping and Villar

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

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

Diversification Opportunities for Big Shopping and Villar

0.18

Correlation Coefficient

Big Shopping  Villar

Average diversification

The 3 months correlation between Big and Villar is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Big Shopping Centers and Villar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Villar and Big Shopping 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 Big Shopping Centers are associated (or correlated) with Villar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Villar has no effect on the direction of Big Shopping i.e., Big Shopping and Villar go up and down completely randomly.

Pair Corralation between Big Shopping and Villar

Assuming the 90 days trading horizon Big Shopping Centers is expected to under-perform the Villar. But the stock apears to be less risky and, when comparing its historical volatility, Big Shopping Centers is 1.1 times less risky than Villar. The stock trades about -0.05 of its potential returns per unit of risk. The Villar is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,598,000  in Villar on December 29, 2024 and sell it today you would earn a total of  186,000  from holding Villar or generate 11.64% return on investment over 90 days.

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

Big Shopping Centers  vs.  Villar

Big Shopping Centers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Shopping Centers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Big Shopping is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Villar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Villar are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Villar sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Big Shopping and Villar

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

The idea behind Big Shopping Centers and Villar 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.