Correlation Between Merlin Properties and Gestamp Automocion
Can any of the company-specific risk be diversified away by investing in both Merlin Properties and Gestamp Automocion 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 Merlin Properties and Gestamp Automocion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merlin Properties SOCIMI and Gestamp Automocion SA, you can compare the effects of market volatilities on Merlin Properties and Gestamp Automocion 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 Merlin Properties with a short position of Gestamp Automocion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Gestamp Automocion.
Diversification Opportunities for Merlin Properties and Gestamp Automocion
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merlin and Gestamp is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Gestamp Automocion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gestamp Automocion and Merlin Properties 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 Merlin Properties SOCIMI are associated (or correlated) with Gestamp Automocion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gestamp Automocion has no effect on the direction of Merlin Properties i.e., Merlin Properties and Gestamp Automocion go up and down completely randomly.
Pair Corralation between Merlin Properties and Gestamp Automocion
Assuming the 90 days trading horizon Merlin Properties is expected to generate 1.22 times less return on investment than Gestamp Automocion. But when comparing it to its historical volatility, Merlin Properties SOCIMI is 1.92 times less risky than Gestamp Automocion. It trades about 0.31 of its potential returns per unit of risk. Gestamp Automocion SA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 258.00 in Gestamp Automocion SA on April 25, 2025 and sell it today you would earn a total of 61.00 from holding Gestamp Automocion SA or generate 23.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Merlin Properties SOCIMI vs. Gestamp Automocion SA
Performance |
Timeline |
Merlin Properties SOCIMI |
Gestamp Automocion |
Merlin Properties and Gestamp Automocion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merlin Properties and Gestamp Automocion
The main advantage of trading using opposite Merlin Properties and Gestamp Automocion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merlin Properties position performs unexpectedly, Gestamp Automocion 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 Gestamp Automocion will offset losses from the drop in Gestamp Automocion's long position.Merlin Properties vs. Vytrus Biotech SA | Merlin Properties vs. Media Investment Optimization | Merlin Properties vs. Energy Solar Tech | Merlin Properties vs. Squirrel Media SA |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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