Correlation Between Mapfre and EDreams Odigeo

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

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

Diversification Opportunities for Mapfre and EDreams Odigeo

-0.15

Correlation Coefficient

Mapfre  EDreams Odigeo

Good diversification

The 3 months correlation between Mapfre and EDreams is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and eDreams Odigeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eDreams Odigeo SA and Mapfre 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 are associated (or correlated) with EDreams Odigeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eDreams Odigeo SA has no effect on the direction of Mapfre i.e., Mapfre and EDreams Odigeo go up and down completely randomly.

Pair Corralation between Mapfre and EDreams Odigeo

Assuming the 90 days trading horizon Mapfre is expected to generate 0.61 times more return on investment than EDreams Odigeo. However, Mapfre is 1.64 times less risky than EDreams Odigeo. It trades about 0.19 of its potential returns per unit of risk. eDreams Odigeo SA is currently generating about -0.08 per unit of risk. If you would invest  244.00  in Mapfre on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Mapfre or generate 17.21% return on investment over 90 days.

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

Mapfre  vs.  eDreams Odigeo SA

Mapfre

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Mapfre exhibited solid returns over the last few months and may actually be approaching a breakup point.

eDreams Odigeo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days eDreams Odigeo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Mapfre and EDreams Odigeo

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

The idea behind Mapfre and eDreams Odigeo 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.