Correlation Between SP Merval and Molinos Juan

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

By analyzing existing cross correlation between SP Merval and Molinos Juan Semino, you can compare the effects of market volatilities on SP Merval and Molinos Juan 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 SP Merval with a short position of Molinos Juan. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Merval and Molinos Juan.

Diversification Opportunities for SP Merval and Molinos Juan

0.0

Correlation Coefficient

SP Merval  Molinos Juan

Pay attention - limited upside

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

Pair Corralation between SP Merval and Molinos Juan

If you would invest  11,125  in Molinos Juan Semino on September 14, 2024 and sell it today you would earn a total of  6,100  from holding Molinos Juan Semino or generate 54.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

SP Merval  vs.  Molinos Juan Semino

Pair Trading with SP Merval and Molinos Juan

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

The idea behind SP Merval and Molinos Juan Semino 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..