Correlation Between Linea Directa and Euronext

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

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

Diversification Opportunities for Linea Directa and Euronext

0.48

Correlation Coefficient

Linea Directa  Euronext

Very weak diversification

The 3 months correlation between Linea and Euronext is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Linea Directa Aseguradora and Euronext NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronext NV and Linea Directa 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 Linea Directa Aseguradora are associated (or correlated) with Euronext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronext NV has no effect on the direction of Linea Directa i.e., Linea Directa and Euronext go up and down completely randomly.

Pair Corralation between Linea Directa and Euronext

Assuming the 90 days trading horizon Linea Directa Aseguradora is expected to generate 1.55 times more return on investment than Euronext. However, Linea Directa is 1.55 times more volatile than Euronext NV. It trades about 0.14 of its potential returns per unit of risk. Euronext NV is currently generating about 0.16 per unit of risk. If you would invest  118.00  in Linea Directa Aseguradora on April 16, 2025 and sell it today you would earn a total of  17.00  from holding Linea Directa Aseguradora or generate 14.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Linea Directa Aseguradora  vs.  Euronext NV

Linea Directa Aseguradora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Linea Directa Aseguradora are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Linea Directa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Euronext NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Euronext NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Euronext may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Linea Directa and Euronext

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

The idea behind Linea Directa Aseguradora and Euronext NV 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.