Correlation Between Merlin Properties and Repsol

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

Diversification Opportunities for Merlin Properties and Repsol

0.96

Correlation Coefficient

Merlin Properties  Repsol

Almost no diversification

The 3 months correlation between Merlin and Repsol is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of Merlin Properties i.e., Merlin Properties and Repsol go up and down completely randomly.

Pair Corralation between Merlin Properties and Repsol

Assuming the 90 days trading horizon Merlin Properties is expected to generate 1.6 times less return on investment than Repsol. But when comparing it to its historical volatility, Merlin Properties SOCIMI is 1.18 times less risky than Repsol. It trades about 0.3 of its potential returns per unit of risk. Repsol is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  992.00  in Repsol on April 21, 2025 and sell it today you would earn a total of  317.00  from holding Repsol or generate 31.96% 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.  Repsol

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.

Repsol

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Repsol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merlin Properties and Repsol

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

The idea behind Merlin Properties SOCIMI and Repsol 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.