Correlation Between Metrovacesa and Solaria Energa

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

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

Diversification Opportunities for Metrovacesa and Solaria Energa

-0.49

Correlation Coefficient

Metrovacesa  Solaria Energa

Very good diversification

The 3 months correlation between Metrovacesa and Solaria is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Solaria Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaria Energa y 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 Solaria Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaria Energa y has no effect on the direction of Metrovacesa i.e., Metrovacesa and Solaria Energa go up and down completely randomly.

Pair Corralation between Metrovacesa and Solaria Energa

Assuming the 90 days trading horizon Metrovacesa SA is expected to generate 0.52 times more return on investment than Solaria Energa. However, Metrovacesa SA is 1.93 times less risky than Solaria Energa. It trades about 0.08 of its potential returns per unit of risk. Solaria Energa y is currently generating about -0.06 per unit of risk. If you would invest  573.00  in Metrovacesa SA on October 12, 2024 and sell it today you would earn a total of  306.00  from holding Metrovacesa SA or generate 53.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Metrovacesa SA  vs.  Solaria Energa y

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 weak fundamental indicators, Metrovacesa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Solaria Energa y

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solaria Energa y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Metrovacesa and Solaria Energa

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

The idea behind Metrovacesa SA and Solaria Energa y 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.