Correlation Between Rackla Metals and Ferrovial

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

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

Diversification Opportunities for Rackla Metals and Ferrovial

0.75

Correlation Coefficient

Rackla Metals  Ferrovial

Poor diversification

The 3 months correlation between Rackla and Ferrovial is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rackla Metals and Ferrovial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial and Rackla Metals 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 Rackla Metals are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial has no effect on the direction of Rackla Metals i.e., Rackla Metals and Ferrovial go up and down completely randomly.

Pair Corralation between Rackla Metals and Ferrovial

If you would invest  2.10  in Rackla Metals on September 4, 2024 and sell it today you would earn a total of  4.90  from holding Rackla Metals or generate 233.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Rackla Metals  vs.  Ferrovial

Rackla Metals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rackla Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Rackla Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Ferrovial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferrovial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ferrovial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rackla Metals and Ferrovial

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

The idea behind Rackla Metals and Ferrovial 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.