Correlation Between Mapfre SA and Nib Holdings

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

By analyzing existing cross correlation between Mapfre SA and nib holdings limited, you can compare the effects of market volatilities on Mapfre SA and Nib Holdings 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 Mapfre SA with a short position of Nib Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapfre SA and Nib Holdings.

Diversification Opportunities for Mapfre SA and Nib Holdings

0.4

Correlation Coefficient

Mapfre SA  Nib Holdings

Very weak diversification

The 3 months correlation between Mapfre and Nib is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre SA and nib holdings limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nib holdings limited and Mapfre SA 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 Mapfre SA are associated (or correlated) with Nib Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nib holdings limited has no effect on the direction of Mapfre SA i.e., Mapfre SA and Nib Holdings go up and down completely randomly.

Pair Corralation between Mapfre SA and Nib Holdings

Assuming the 90 days trading horizon Mapfre SA is expected to generate 2.09 times less return on investment than Nib Holdings. But when comparing it to its historical volatility, Mapfre SA is 1.55 times less risky than Nib Holdings. It trades about 0.14 of its potential returns per unit of risk. nib holdings limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  267.00  in nib holdings limited on December 19, 2024 and sell it today you would earn a total of  97.00  from holding nib holdings limited or generate 36.33% return on investment over 90 days.

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

Mapfre SA  vs.  nib holdings limited

Mapfre SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mapfre SA reported solid returns over the last few months and may actually be approaching a breakup point.

nib holdings limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in nib holdings limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nib Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mapfre SA and Nib Holdings

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

The idea behind Mapfre SA and nib holdings limited 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.