Correlation Between Topaz Energy and Acciona SA

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

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

Diversification Opportunities for Topaz Energy and Acciona SA

0.2

Correlation Coefficient

Topaz Energy  Acciona SA

Modest diversification

The 3 months correlation between Topaz and Acciona is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Topaz Energy Corp and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and Topaz Energy 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 Topaz Energy Corp are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Topaz Energy i.e., Topaz Energy and Acciona SA go up and down completely randomly.

Pair Corralation between Topaz Energy and Acciona SA

Assuming the 90 days horizon Topaz Energy Corp is expected to generate 0.57 times more return on investment than Acciona SA. However, Topaz Energy Corp is 1.75 times less risky than Acciona SA. It trades about 0.09 of its potential returns per unit of risk. Acciona SA is currently generating about 0.02 per unit of risk. If you would invest  1,583  in Topaz Energy Corp on October 12, 2024 and sell it today you would earn a total of  391.00  from holding Topaz Energy Corp or generate 24.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.77%
Values	Daily Returns

Topaz Energy Corp  vs.  Acciona SA

Topaz Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acciona SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acciona SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Topaz Energy and Acciona SA

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

The idea behind Topaz Energy Corp and Acciona SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.