Correlation Between Metrovacesa and Realia

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

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

Diversification Opportunities for Metrovacesa and Realia

0.41

Correlation Coefficient

Metrovacesa  Realia

Very weak diversification

The 3 months correlation between Metrovacesa and Realia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Realia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realia 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 Realia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realia has no effect on the direction of Metrovacesa i.e., Metrovacesa and Realia go up and down completely randomly.

Pair Corralation between Metrovacesa and Realia

Assuming the 90 days trading horizon Metrovacesa SA is expected to generate 0.94 times more return on investment than Realia. However, Metrovacesa SA is 1.06 times less risky than Realia. It trades about 0.04 of its potential returns per unit of risk. Realia is currently generating about 0.02 per unit of risk. If you would invest  1,025  in Metrovacesa SA on April 24, 2025 and sell it today you would earn a total of  35.00  from holding Metrovacesa SA or generate 3.41% return on investment over 90 days.

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

Metrovacesa SA  vs.  Realia

Metrovacesa SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metrovacesa SA are ranked lower than 3 (%) 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.

Realia

Risk-Adjusted Performance

Weak

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

Pair Trading with Metrovacesa and Realia

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

The idea behind Metrovacesa SA and Realia 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.