Correlation Between Caixabank and Investor
Can any of the company-specific risk be diversified away by investing in both Caixabank and Investor 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 Caixabank and Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA ADR and Investor AB ser, you can compare the effects of market volatilities on Caixabank and Investor 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 Caixabank with a short position of Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Investor.
Diversification Opportunities for Caixabank and Investor
Very weak diversification
The 3 months correlation between Caixabank and Investor is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA ADR and Investor AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB ser and Caixabank 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 Caixabank SA ADR are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB ser has no effect on the direction of Caixabank i.e., Caixabank and Investor go up and down completely randomly.
Pair Corralation between Caixabank and Investor
Assuming the 90 days horizon Caixabank SA ADR is expected to generate 3.55 times more return on investment than Investor. However, Caixabank is 3.55 times more volatile than Investor AB ser. It trades about 0.13 of its potential returns per unit of risk. Investor AB ser is currently generating about -0.05 per unit of risk. If you would invest 135.00 in Caixabank SA ADR on January 20, 2024 and sell it today you would earn a total of 34.00 from holding Caixabank SA ADR or generate 25.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caixabank SA ADR vs. Investor AB ser
Performance |
| Timeline |
| Caixabank SA ADR |
| Investor AB ser |
Caixabank and Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Investor
The main advantage of trading using opposite Caixabank and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor's long position.| Caixabank vs. Permanent TSB Group | Caixabank vs. Bank of Botetourt | Caixabank vs. Cashmere Valley Bank | Caixabank vs. Oak Valley Bancorp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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