Correlation Between Berkeley Energia and Mapfre

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

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

Diversification Opportunities for Berkeley Energia and Mapfre

0.52

Correlation Coefficient

Berkeley Energia  Mapfre

Very weak diversification

The 3 months correlation between Berkeley and Mapfre is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Berkeley Energia Limited and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Berkeley Energia 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 Berkeley Energia Limited are associated (or correlated) with Mapfre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre has no effect on the direction of Berkeley Energia i.e., Berkeley Energia and Mapfre go up and down completely randomly.

Pair Corralation between Berkeley Energia and Mapfre

Assuming the 90 days trading horizon Berkeley Energia Limited is expected to under-perform the Mapfre. In addition to that, Berkeley Energia is 2.13 times more volatile than Mapfre. It trades about -0.02 of its total potential returns per unit of risk. Mapfre is currently generating about 0.12 per unit of volatility. If you would invest  210.00  in Mapfre on September 14, 2024 and sell it today you would earn a total of  40.00  from holding Mapfre or generate 19.05% return on investment over 90 days.

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

Berkeley Energia Limited  vs.  Mapfre

Berkeley Energia

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berkeley Energia Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Berkeley Energia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mapfre

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Mapfre may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Berkeley Energia and Mapfre

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

The idea behind Berkeley Energia Limited and Mapfre 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.