Correlation Between Mapfre and Energy Solar

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

By analyzing existing cross correlation between Mapfre and Energy Solar Tech, you can compare the effects of market volatilities on Mapfre and Energy Solar 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 Energy Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapfre and Energy Solar.

Diversification Opportunities for Mapfre and Energy Solar

-0.36

Correlation Coefficient

Mapfre  Energy Solar

Very good diversification

The 3 months correlation between Mapfre and Energy is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and Energy Solar Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Solar Tech 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 Energy Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Solar Tech has no effect on the direction of Mapfre i.e., Mapfre and Energy Solar go up and down completely randomly.

Pair Corralation between Mapfre and Energy Solar

Assuming the 90 days trading horizon Mapfre is expected to generate 0.56 times more return on investment than Energy Solar. However, Mapfre is 1.78 times less risky than Energy Solar. It trades about 0.19 of its potential returns per unit of risk. Energy Solar Tech is currently generating about -0.07 per unit of risk. If you would invest  244.00  in Mapfre on December 29, 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.  Energy Solar Tech

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.

Energy Solar Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Solar Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental 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 Energy Solar

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

The idea behind Mapfre and Energy Solar Tech 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.