Correlation Between Merlin Properties and Montebalito

Can any of the company-specific risk be diversified away by investing in both Merlin Properties and Montebalito 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 Montebalito 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 Montebalito SA, you can compare the effects of market volatilities on Merlin Properties and Montebalito 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 Montebalito. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Montebalito.

Diversification Opportunities for Merlin Properties and Montebalito

0.76

Correlation Coefficient

Merlin Properties  Montebalito

Poor diversification

The 3 months correlation between Merlin and Montebalito is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Montebalito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montebalito SA 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 Montebalito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montebalito SA has no effect on the direction of Merlin Properties i.e., Merlin Properties and Montebalito go up and down completely randomly.

Pair Corralation between Merlin Properties and Montebalito

Assuming the 90 days trading horizon Merlin Properties SOCIMI is expected to generate 0.6 times more return on investment than Montebalito. However, Merlin Properties SOCIMI is 1.66 times less risky than Montebalito. It trades about 0.3 of its potential returns per unit of risk. Montebalito SA is currently generating about 0.08 per unit of risk. If you would invest  966.00  in Merlin Properties SOCIMI on April 22, 2025 and sell it today you would earn a total of  182.00  from holding Merlin Properties SOCIMI or generate 18.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Merlin Properties SOCIMI  vs.  Montebalito SA

Merlin Properties SOCIMI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Merlin Properties SOCIMI are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Merlin Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

Montebalito SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Montebalito SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Montebalito may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Merlin Properties and Montebalito

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

The idea behind Merlin Properties SOCIMI and Montebalito SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.