Correlation Between Repsol and All Iron

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

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

Diversification Opportunities for Repsol and All Iron

0.55

Correlation Coefficient

Repsol  All Iron

Very weak diversification

The 3 months correlation between Repsol and All is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and All Iron Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Iron Re 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 All Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Iron Re has no effect on the direction of Repsol i.e., Repsol and All Iron go up and down completely randomly.

Pair Corralation between Repsol and All Iron

Assuming the 90 days trading horizon Repsol is expected to generate 0.96 times more return on investment than All Iron. However, Repsol is 1.05 times less risky than All Iron. It trades about 0.39 of its potential returns per unit of risk. All Iron Re is currently generating about 0.16 per unit of risk. If you would invest  992.00  in Repsol on April 22, 2025 and sell it today you would earn a total of  314.00  from holding Repsol or generate 31.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Repsol  vs.  All Iron Re

Repsol

Risk-Adjusted Performance

Very Strong

Over the last 90 days Repsol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Repsol exhibited solid returns over the last few months and may actually be approaching a breakup point.

All Iron Re

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in All Iron Re are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, All Iron may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Repsol and All Iron

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

The idea behind Repsol and All Iron Re 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.