Correlation Between Castellana Properties and Mapfre

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

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

Diversification Opportunities for Castellana Properties and Mapfre

0.65

Correlation Coefficient

Castellana Properties  Mapfre

Poor diversification

The 3 months correlation between Castellana and Mapfre is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Castellana Properties Socimi and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Castellana Properties 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 Castellana Properties Socimi 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 Castellana Properties i.e., Castellana Properties and Mapfre go up and down completely randomly.

Pair Corralation between Castellana Properties and Mapfre

Assuming the 90 days trading horizon Castellana Properties is expected to generate 1.62 times less return on investment than Mapfre. But when comparing it to its historical volatility, Castellana Properties Socimi is 3.27 times less risky than Mapfre. It trades about 0.26 of its potential returns per unit of risk. Mapfre is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  224.00  in Mapfre on September 13, 2024 and sell it today you would earn a total of  22.00  from holding Mapfre or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Castellana Properties Socimi  vs.  Mapfre

Castellana Properties

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Castellana Properties Socimi are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Castellana Properties 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 10 (%) 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 January 2025.

Pair Trading with Castellana Properties and Mapfre

The main advantage of trading using opposite Castellana Properties and Mapfre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castellana Properties 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 Castellana Properties Socimi 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.