Correlation Between Talgo SA and Mapfre

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

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

Diversification Opportunities for Talgo SA and Mapfre

0.04

Correlation Coefficient

Talgo SA  Mapfre

Significant diversification

The 3 months correlation between Talgo and Mapfre is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Talgo SA and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Talgo SA 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 Talgo 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 Talgo SA i.e., Talgo SA and Mapfre go up and down completely randomly.

Pair Corralation between Talgo SA and Mapfre

Assuming the 90 days trading horizon Talgo SA is expected to generate 3.23 times less return on investment than Mapfre. In addition to that, Talgo SA is 1.74 times more volatile than Mapfre. It trades about 0.03 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 30, 2024 and sell it today you would earn a total of  42.00  from holding Mapfre or generate 17.21% return on investment over 90 days.

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

Talgo SA  vs.  Mapfre

Talgo SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talgo SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Talgo SA 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 14 (%) 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 Talgo SA and Mapfre

The main advantage of trading using opposite Talgo SA and Mapfre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talgo SA 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 Talgo 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 Transaction History module to view history of all your transactions and understand their impact on performance.