Correlation Between Euronext and Linea Directa

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

By analyzing existing cross correlation between Euronext NV and Linea Directa Aseguradora, you can compare the effects of market volatilities on Euronext and Linea Directa 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 Euronext with a short position of Linea Directa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronext and Linea Directa.

Diversification Opportunities for Euronext and Linea Directa

0.0

Correlation Coefficient

Euronext  Linea Directa

Pay attention - limited upside

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

Pair Corralation between Euronext and Linea Directa

If you would invest  116.00  in Linea Directa Aseguradora on April 20, 2025 and sell it today you would earn a total of  19.00  from holding Linea Directa Aseguradora or generate 16.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Euronext NV  vs.  Linea Directa Aseguradora

Euronext NV

Risk-Adjusted Performance

Very Weak

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

Linea Directa Aseguradora

Risk-Adjusted Performance

Good

Over the last 90 days Linea Directa Aseguradora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Linea Directa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Euronext and Linea Directa

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

The idea behind Euronext NV and Linea Directa Aseguradora 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.