Correlation Between Shell PLC and Ferrovial

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

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

Diversification Opportunities for Shell PLC and Ferrovial

0.27

Correlation Coefficient

Shell PLC  Ferrovial

Modest diversification

The 3 months correlation between Shell and Ferrovial is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shell PLC and Ferrovial SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SE and Shell PLC 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 Shell PLC are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SE has no effect on the direction of Shell PLC i.e., Shell PLC and Ferrovial go up and down completely randomly.

Pair Corralation between Shell PLC and Ferrovial

Assuming the 90 days trading horizon Shell PLC is expected to generate 1.87 times less return on investment than Ferrovial. But when comparing it to its historical volatility, Shell PLC is 2.25 times less risky than Ferrovial. It trades about 0.11 of its potential returns per unit of risk. Ferrovial SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,998  in Ferrovial SE on April 20, 2025 and sell it today you would earn a total of  537.00  from holding Ferrovial SE or generate 13.43% return on investment over 90 days.

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

Shell PLC  vs.  Ferrovial SE

Shell PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Shell PLC may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Ferrovial SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrovial SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ferrovial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shell PLC and Ferrovial

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

The idea behind Shell PLC and Ferrovial SE 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.