Correlation Between Metrovacesa and Libertas 7

Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Libertas 7 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 Metrovacesa and Libertas 7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metrovacesa SA and Libertas 7 SA, you can compare the effects of market volatilities on Metrovacesa and Libertas 7 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 Metrovacesa with a short position of Libertas 7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Libertas 7.

Diversification Opportunities for Metrovacesa and Libertas 7

-0.46

Correlation Coefficient

Metrovacesa  Libertas 7

Very good diversification

The 3 months correlation between Metrovacesa and Libertas is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Libertas 7 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libertas 7 SA and Metrovacesa 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 Metrovacesa SA are associated (or correlated) with Libertas 7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libertas 7 SA has no effect on the direction of Metrovacesa i.e., Metrovacesa and Libertas 7 go up and down completely randomly.

Pair Corralation between Metrovacesa and Libertas 7

Assuming the 90 days trading horizon Metrovacesa is expected to generate 17.33 times less return on investment than Libertas 7. But when comparing it to its historical volatility, Metrovacesa SA is 1.6 times less risky than Libertas 7. It trades about 0.02 of its potential returns per unit of risk. Libertas 7 SA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Libertas 7 SA on April 22, 2025 and sell it today you would earn a total of  55.00  from holding Libertas 7 SA or generate 33.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Metrovacesa SA  vs.  Libertas 7 SA

Metrovacesa SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metrovacesa SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Metrovacesa is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Libertas 7 SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Libertas 7 SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Libertas 7 exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metrovacesa and Libertas 7

The main advantage of trading using opposite Metrovacesa and Libertas 7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Libertas 7 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 Libertas 7 will offset losses from the drop in Libertas 7's long position.

The idea behind Metrovacesa SA and Libertas 7 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.