Correlation Between Repsol and Lingotes

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

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

Diversification Opportunities for Repsol and Lingotes

0.43

Correlation Coefficient

Repsol  Lingotes

Very weak diversification

The 3 months correlation between Repsol and Lingotes is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and Lingotes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingotes and Repsol 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 Repsol are associated (or correlated) with Lingotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingotes has no effect on the direction of Repsol i.e., Repsol and Lingotes go up and down completely randomly.

Pair Corralation between Repsol and Lingotes

Assuming the 90 days trading horizon Repsol is expected to generate 0.36 times more return on investment than Lingotes. However, Repsol is 2.79 times less risky than Lingotes. It trades about 0.37 of its potential returns per unit of risk. Lingotes is currently generating about 0.08 per unit of risk. If you would invest  1,014  in Repsol on April 24, 2025 and sell it today you would earn a total of  293.00  from holding Repsol or generate 28.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Repsol  vs.  Lingotes

Repsol

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 29 (%) 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.

Lingotes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lingotes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Lingotes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Repsol and Lingotes

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

The idea behind Repsol and Lingotes 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.