Correlation Between Repsol SA and World Kinect

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

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

Diversification Opportunities for Repsol SA and World Kinect

-0.61

Correlation Coefficient

Repsol SA  World Kinect

Excellent diversification

The 3 months correlation between Repsol and World is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Repsol SA and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect and Repsol SA 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 Repsol SA are associated (or correlated) with World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of Repsol SA i.e., Repsol SA and World Kinect go up and down completely randomly.

Pair Corralation between Repsol SA and World Kinect

If you would invest  2,807  in World Kinect on September 4, 2024 and sell it today you would earn a total of  127.00  from holding World Kinect or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Repsol SA  vs.  World Kinect

Repsol SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Repsol SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Repsol SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

World Kinect

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in World Kinect are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking signals, World Kinect may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Repsol SA and World Kinect

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

The idea behind Repsol SA and World Kinect 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.