Correlation Between Pescanova and Mapfre

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

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

Diversification Opportunities for Pescanova and Mapfre

0.43

Correlation Coefficient

Pescanova  Mapfre

Very weak diversification

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

Pair Corralation between Pescanova and Mapfre

Assuming the 90 days trading horizon Pescanova is expected to generate 1.44 times less return on investment than Mapfre. In addition to that, Pescanova is 2.19 times more volatile than Mapfre. It trades about 0.06 of its total potential returns per unit of risk. Mapfre is currently generating about 0.19 per unit of volatility. If you would invest  244.00  in Mapfre on December 28, 2024 and sell it today you would earn a total of  43.00  from holding Mapfre or generate 17.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Pescanova SA  vs.  Mapfre

Pescanova SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pescanova SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Pescanova may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mapfre

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Mapfre exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pescanova and Mapfre

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

The idea behind Pescanova SA and Mapfre 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.