Correlation Between Home Capital and Testa Residencial
Can any of the company-specific risk be diversified away by investing in both Home Capital and Testa Residencial 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 Home Capital and Testa Residencial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and Testa Residencial SOCIMI, you can compare the effects of market volatilities on Home Capital and Testa Residencial 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 Home Capital with a short position of Testa Residencial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Testa Residencial.
Diversification Opportunities for Home Capital and Testa Residencial
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Testa is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Testa Residencial SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Testa Residencial SOCIMI and Home Capital 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 Home Capital Rentals are associated (or correlated) with Testa Residencial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Testa Residencial SOCIMI has no effect on the direction of Home Capital i.e., Home Capital and Testa Residencial go up and down completely randomly.
Pair Corralation between Home Capital and Testa Residencial
Assuming the 90 days trading horizon Home Capital Rentals is expected to generate 0.7 times more return on investment than Testa Residencial. However, Home Capital Rentals is 1.43 times less risky than Testa Residencial. It trades about 0.13 of its potential returns per unit of risk. Testa Residencial SOCIMI is currently generating about -0.43 per unit of risk. If you would invest 715.00 in Home Capital Rentals on February 28, 2024 and sell it today you would earn a total of 10.00 from holding Home Capital Rentals or generate 1.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Home Capital Rentals vs. Testa Residencial SOCIMI
Performance |
Timeline |
Home Capital Rentals |
Testa Residencial SOCIMI |
Home Capital and Testa Residencial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Capital and Testa Residencial
The main advantage of trading using opposite Home Capital and Testa Residencial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, Testa Residencial 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 Testa Residencial will offset losses from the drop in Testa Residencial's long position.Home Capital vs. Airbus Group SE | Home Capital vs. Industria de Diseno | Home Capital vs. Vale SA | Home Capital vs. Iberdrola SA |
Testa Residencial vs. Meridia Real Estate | Testa Residencial vs. Hispanotels Inversiones SOCIMI | Testa Residencial vs. Metrovacesa SA | Testa Residencial vs. Elecnor 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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