Correlation Between Nexity and Covivio SA

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

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

Diversification Opportunities for Nexity and Covivio SA

-0.09

Correlation Coefficient

Nexity  Covivio SA

Good diversification

The 3 months correlation between Nexity and Covivio is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nexity and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA and Nexity 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 Nexity are associated (or correlated) with Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of Nexity i.e., Nexity and Covivio SA go up and down completely randomly.

Pair Corralation between Nexity and Covivio SA

Assuming the 90 days trading horizon Nexity is expected to under-perform the Covivio SA. In addition to that, Nexity is 2.3 times more volatile than Covivio SA. It trades about -0.09 of its total potential returns per unit of risk. Covivio SA is currently generating about 0.07 per unit of volatility. If you would invest  4,888  in Covivio SA on December 30, 2024 and sell it today you would earn a total of  312.00  from holding Covivio SA or generate 6.38% return on investment over 90 days.

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

Nexity  vs.  Covivio SA

Nexity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Covivio SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Covivio SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Covivio SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nexity and Covivio SA

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

The idea behind Nexity and Covivio SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.