Correlation Between Redeia Corporacion and Mapfre

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

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

Diversification Opportunities for Redeia Corporacion and Mapfre

-0.16

Correlation Coefficient

Redeia Corporacion  Mapfre

Good diversification

The 3 months correlation between Redeia and Mapfre is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Redeia Corporacion SA and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Redeia Corporacion 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 Redeia Corporacion 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 Redeia Corporacion i.e., Redeia Corporacion and Mapfre go up and down completely randomly.

Pair Corralation between Redeia Corporacion and Mapfre

Assuming the 90 days trading horizon Redeia Corporacion is expected to generate 6.65 times less return on investment than Mapfre. But when comparing it to its historical volatility, Redeia Corporacion SA is 1.49 times less risky than Mapfre. It trades about 0.02 of its potential returns per unit of risk. Mapfre is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  249.00  in Mapfre on November 28, 2024 and sell it today you would earn a total of  20.00  from holding Mapfre or generate 8.03% return on investment over 90 days.

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

Redeia Corporacion SA  vs.  Mapfre

Redeia Corporacion

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Redeia Corporacion SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Redeia Corporacion is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mapfre

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Mapfre may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Redeia Corporacion and Mapfre

The main advantage of trading using opposite Redeia Corporacion and Mapfre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redeia Corporacion 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 Redeia Corporacion 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.