Correlation Between Repsol and Mapfre
Can any of the company-specific risk be diversified away by investing in both Repsol 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 Repsol and Mapfre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Repsol and Mapfre, you can compare the effects of market volatilities on Repsol 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 Repsol with a short position of Mapfre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repsol and Mapfre.
Diversification Opportunities for Repsol and Mapfre
Poor diversification
The 3 months correlation between Repsol and Mapfre is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Repsol 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 Repsol 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 Repsol i.e., Repsol and Mapfre go up and down completely randomly.
Pair Corralation between Repsol and Mapfre
Assuming the 90 days trading horizon Repsol is expected to under-perform the Mapfre. In addition to that, Repsol is 1.09 times more volatile than Mapfre. It trades about -0.01 of its total potential returns per unit of risk. Mapfre is currently generating about 0.1 per unit of volatility. If you would invest 183.00 in Mapfre on December 2, 2024 and sell it today you would earn a total of 88.00 from holding Mapfre or generate 48.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Repsol vs. Mapfre
Performance |
Timeline |
Repsol |
Mapfre |
Repsol and Mapfre Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Repsol and Mapfre
The main advantage of trading using opposite Repsol and Mapfre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repsol 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 Repsol 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.Mapfre vs. Media Investment Optimization | Mapfre vs. Naturhouse Health SA | Mapfre vs. Hispanotels Inversiones SOCIMI | Mapfre vs. Vytrus Biotech SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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