Correlation Between Mapfre and Repsol

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

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

Diversification Opportunities for Mapfre and Repsol

0.54

Correlation Coefficient

Mapfre  Repsol

Very weak diversification

The 3 months correlation between Mapfre and Repsol is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of Mapfre i.e., Mapfre and Repsol go up and down completely randomly.

Pair Corralation between Mapfre and Repsol

Assuming the 90 days trading horizon Mapfre is expected to generate 0.88 times more return on investment than Repsol. However, Mapfre is 1.13 times less risky than Repsol. It trades about 0.2 of its potential returns per unit of risk. Repsol is currently generating about 0.15 per unit of risk. If you would invest  244.00  in Mapfre on December 27, 2024 and sell it today you would earn a total of  45.00  from holding Mapfre or generate 18.44% return on investment over 90 days.

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

Mapfre  vs.  Repsol

Mapfre

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 15 (%) 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.

Repsol

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Repsol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mapfre and Repsol

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

The idea behind Mapfre and Repsol 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 Stocks Directory module to find actively traded stocks across global markets.