Correlation Between Neinor Homes and Mapfre SA

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

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

Diversification Opportunities for Neinor Homes and Mapfre SA

0.67

Correlation Coefficient

Neinor Homes  Mapfre SA

Poor diversification

The 3 months correlation between Neinor and Mapfre is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and Mapfre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre SA and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with Mapfre SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre SA has no effect on the direction of Neinor Homes i.e., Neinor Homes and Mapfre SA go up and down completely randomly.

Pair Corralation between Neinor Homes and Mapfre SA

Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 1.21 times more return on investment than Mapfre SA. However, Neinor Homes is 1.21 times more volatile than Mapfre SA. It trades about 0.16 of its potential returns per unit of risk. Mapfre SA is currently generating about 0.04 per unit of risk. If you would invest  1,372  in Neinor Homes SA on September 22, 2024 and sell it today you would earn a total of  230.00  from holding Neinor Homes SA or generate 16.76% return on investment over 90 days.

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

Neinor Homes SA  vs.  Mapfre SA

Neinor Homes SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Neinor Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mapfre SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mapfre SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Neinor Homes and Mapfre SA

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

The idea behind Neinor Homes SA and Mapfre 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.