Correlation Between Metrovacesa and Vivenio Residencial

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

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

Diversification Opportunities for Metrovacesa and Vivenio Residencial

-0.63

Correlation Coefficient

Metrovacesa  Vivenio Residencial

Excellent diversification

The 3 months correlation between Metrovacesa and Vivenio is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Vivenio Residencial SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivenio Residencial 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 Vivenio Residencial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivenio Residencial has no effect on the direction of Metrovacesa i.e., Metrovacesa and Vivenio Residencial go up and down completely randomly.

Pair Corralation between Metrovacesa and Vivenio Residencial

Assuming the 90 days trading horizon Metrovacesa SA is expected to generate 6.96 times more return on investment than Vivenio Residencial. However, Metrovacesa is 6.96 times more volatile than Vivenio Residencial SOCIMI. It trades about 0.28 of its potential returns per unit of risk. Vivenio Residencial SOCIMI is currently generating about -0.18 per unit of risk. If you would invest  846.00  in Metrovacesa SA on December 1, 2024 and sell it today you would earn a total of  142.00  from holding Metrovacesa SA or generate 16.78% return on investment over 90 days.

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

Metrovacesa SA  vs.  Vivenio Residencial SOCIMI

Metrovacesa SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metrovacesa SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Metrovacesa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vivenio Residencial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vivenio Residencial SOCIMI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Vivenio Residencial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Metrovacesa and Vivenio Residencial

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

The idea behind Metrovacesa SA and Vivenio Residencial SOCIMI 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.