Correlation Between Repsol and Media Investment

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

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

Diversification Opportunities for Repsol and Media Investment

-0.8

Correlation Coefficient

Repsol  Media Investment

Pay attention - limited upside

The 3 months correlation between Repsol and Media is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and Media Investment Optimization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Investment Opt 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 Media Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Investment Opt has no effect on the direction of Repsol i.e., Repsol and Media Investment go up and down completely randomly.

Pair Corralation between Repsol and Media Investment

Assuming the 90 days trading horizon Repsol is expected to generate 0.85 times more return on investment than Media Investment. However, Repsol is 1.18 times less risky than Media Investment. It trades about 0.38 of its potential returns per unit of risk. Media Investment Optimization is currently generating about -0.25 per unit of risk. If you would invest  1,005  in Repsol on April 23, 2025 and sell it today you would earn a total of  301.00  from holding Repsol or generate 29.95% return on investment over 90 days.

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

Repsol  vs.  Media Investment Optimization

Repsol

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 30 (%) 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.

Media Investment Opt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Media Investment Optimization has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Repsol and Media Investment

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

The idea behind Repsol and Media Investment Optimization 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.