Correlation Between Metrovacesa and Naranja 2030

Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Naranja 2030 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 Metrovacesa and Naranja 2030 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metrovacesa SA and Naranja 2030 Pp, you can compare the effects of market volatilities on Metrovacesa and Naranja 2030 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 Metrovacesa with a short position of Naranja 2030. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Naranja 2030.

Diversification Opportunities for Metrovacesa and Naranja 2030

0.72

Correlation Coefficient

Metrovacesa  Naranja 2030

Poor diversification

The 3 months correlation between Metrovacesa and Naranja is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Naranja 2030 Pp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naranja 2030 Pp and Metrovacesa 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 Metrovacesa SA are associated (or correlated) with Naranja 2030. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naranja 2030 Pp has no effect on the direction of Metrovacesa i.e., Metrovacesa and Naranja 2030 go up and down completely randomly.

Pair Corralation between Metrovacesa and Naranja 2030

Assuming the 90 days trading horizon Metrovacesa SA is expected to generate 4.6 times more return on investment than Naranja 2030. However, Metrovacesa is 4.6 times more volatile than Naranja 2030 Pp. It trades about 0.07 of its potential returns per unit of risk. Naranja 2030 Pp is currently generating about 0.12 per unit of risk. If you would invest  757.00  in Metrovacesa SA on October 12, 2024 and sell it today you would earn a total of  122.00  from holding Metrovacesa SA or generate 16.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.47%
Values	Daily Returns

Metrovacesa SA  vs.  Naranja 2030 Pp

Metrovacesa SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metrovacesa SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Metrovacesa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Naranja 2030 Pp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Naranja 2030 Pp are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Naranja 2030 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metrovacesa and Naranja 2030

The main advantage of trading using opposite Metrovacesa and Naranja 2030 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Naranja 2030 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 Naranja 2030 will offset losses from the drop in Naranja 2030's long position.

The idea behind Metrovacesa SA and Naranja 2030 Pp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.