Correlation Between Grifols SA and Ferrovial

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

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

Diversification Opportunities for Grifols SA and Ferrovial

0.33

Correlation Coefficient

Grifols SA  Ferrovial

Weak diversification

The 3 months correlation between Grifols and Ferrovial is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA and Ferrovial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SA and Grifols 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 Grifols SA are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SA has no effect on the direction of Grifols SA i.e., Grifols SA and Ferrovial go up and down completely randomly.

Pair Corralation between Grifols SA and Ferrovial

Assuming the 90 days trading horizon Grifols SA is expected to generate 2.67 times more return on investment than Ferrovial. However, Grifols SA is 2.67 times more volatile than Ferrovial SA. It trades about 0.16 of its potential returns per unit of risk. Ferrovial SA is currently generating about 0.08 per unit of risk. If you would invest  863.00  in Grifols SA on December 4, 2024 and sell it today you would earn a total of  237.00  from holding Grifols SA or generate 27.46% return on investment over 90 days.

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

Grifols SA  vs.  Ferrovial SA

Grifols SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grifols SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Grifols SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ferrovial SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrovial SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ferrovial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Grifols SA and Ferrovial

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

The idea behind Grifols SA and Ferrovial 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.