Correlation Between New England and IRSA Inversiones

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

By analyzing existing cross correlation between New England Realty and IRSA Inversiones Y, you can compare the effects of market volatilities on New England and IRSA Inversiones 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 New England with a short position of IRSA Inversiones. Check out your portfolio center. Please also check ongoing floating volatility patterns of New England and IRSA Inversiones.

Diversification Opportunities for New England and IRSA Inversiones

0.43

Correlation Coefficient

New England  IRSA Inversiones

Very weak diversification

The 3 months correlation between New and IRSA is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding New England Realty and IRSA Inversiones Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRSA Inversiones Y and New England 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 New England Realty are associated (or correlated) with IRSA Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRSA Inversiones Y has no effect on the direction of New England i.e., New England and IRSA Inversiones go up and down completely randomly.

Pair Corralation between New England and IRSA Inversiones

Considering the 90-day investment horizon New England Realty is expected to under-perform the IRSA Inversiones. But the stock apears to be less risky and, when comparing its historical volatility, New England Realty is 2.15 times less risky than IRSA Inversiones. The stock trades about -0.02 of its potential returns per unit of risk. The IRSA Inversiones Y is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,290  in IRSA Inversiones Y on September 13, 2024 and sell it today you would earn a total of  372.00  from holding IRSA Inversiones Y or generate 28.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.45%
Values	Daily Returns

New England Realty  vs.  IRSA Inversiones Y

New England Realty

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days New England Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, New England is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

IRSA Inversiones Y

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IRSA Inversiones Y are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, IRSA Inversiones unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New England and IRSA Inversiones

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

The idea behind New England Realty and IRSA Inversiones 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .