Correlation Between National Grid and Moneda Deuda

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

By analyzing existing cross correlation between National Grid PLC and Moneda Deuda Latinoamericana, you can compare the effects of market volatilities on National Grid and Moneda Deuda 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 National Grid with a short position of Moneda Deuda. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Grid and Moneda Deuda.

Diversification Opportunities for National Grid and Moneda Deuda

0.0

Correlation Coefficient

National Grid  Moneda Deuda

Pay attention - limited upside

The 3 months correlation between National and Moneda is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Grid PLC and Moneda Deuda Latinoamericana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moneda Deuda Latinoa and National Grid 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 National Grid PLC are associated (or correlated) with Moneda Deuda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moneda Deuda Latinoa has no effect on the direction of National Grid i.e., National Grid and Moneda Deuda go up and down completely randomly.

Pair Corralation between National Grid and Moneda Deuda

Considering the 90-day investment horizon National Grid is expected to generate 44.37 times less return on investment than Moneda Deuda. But when comparing it to its historical volatility, National Grid PLC is 42.75 times less risky than Moneda Deuda. It trades about 0.06 of its potential returns per unit of risk. Moneda Deuda Latinoamericana is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  16,493  in Moneda Deuda Latinoamericana on July 10, 2024 and sell it today you would earn a total of  17,450,607  from holding Moneda Deuda Latinoamericana or generate 105806.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.57%
Values	Daily Returns

National Grid PLC  vs.  Moneda Deuda Latinoamericana

National Grid PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Grid PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, National Grid may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Moneda Deuda Latinoa

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moneda Deuda Latinoamericana are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Moneda Deuda disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Grid and Moneda Deuda

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

The idea behind National Grid PLC and Moneda Deuda Latinoamericana 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.