Correlation Between Iberdrola and General De
Can any of the company-specific risk be diversified away by investing in both Iberdrola and General De 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 Iberdrola and General De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iberdrola SA and General De Alquiler, you can compare the effects of market volatilities on Iberdrola and General De 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 Iberdrola with a short position of General De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iberdrola and General De.
Diversification Opportunities for Iberdrola and General De
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Iberdrola and General is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Iberdrola SA and General De Alquiler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General De Alquiler and Iberdrola 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 Iberdrola SA are associated (or correlated) with General De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General De Alquiler has no effect on the direction of Iberdrola i.e., Iberdrola and General De go up and down completely randomly.
Pair Corralation between Iberdrola and General De
Assuming the 90 days trading horizon Iberdrola SA is expected to generate 0.47 times more return on investment than General De. However, Iberdrola SA is 2.12 times less risky than General De. It trades about 0.03 of its potential returns per unit of risk. General De Alquiler is currently generating about 0.01 per unit of risk. If you would invest 984.00 in Iberdrola SA on December 30, 2023 and sell it today you would earn a total of 166.00 from holding Iberdrola SA or generate 16.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Iberdrola SA vs. General De Alquiler
Performance |
Timeline |
Iberdrola SA |
General De Alquiler |
Iberdrola and General De Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Iberdrola and General De
The main advantage of trading using opposite Iberdrola and General De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iberdrola position performs unexpectedly, General De 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 General De will offset losses from the drop in General De's long position.Iberdrola vs. Petroleo Brasileiro SA | Iberdrola vs. Vale SA | Iberdrola vs. Banco Santander | Iberdrola vs. Telefonica |
General De vs. Airbus Group SE | General De vs. Industria De Diseno | General De vs. Vale SA | General De vs. Iberdrola 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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