Correlation Between Investor and Caixabank
Can any of the company-specific risk be diversified away by investing in both Investor and Caixabank 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 Investor and Caixabank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Caixabank SA ADR, you can compare the effects of market volatilities on Investor and Caixabank 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 Investor with a short position of Caixabank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Caixabank.
Diversification Opportunities for Investor and Caixabank
Very weak diversification
The 3 months correlation between Investor and Caixabank is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Caixabank SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank SA ADR and Investor 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 Investor AB ser are associated (or correlated) with Caixabank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixabank SA ADR has no effect on the direction of Investor i.e., Investor and Caixabank go up and down completely randomly.
Pair Corralation between Investor and Caixabank
Assuming the 90 days horizon Investor AB ser is expected to under-perform the Caixabank. But the pink sheet apears to be less risky and, when comparing its historical volatility, Investor AB ser is 4.98 times less risky than Caixabank. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Caixabank SA ADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 159.00 in Caixabank SA ADR on January 26, 2024 and sell it today you would earn a total of 15.01 from holding Caixabank SA ADR or generate 9.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Investor AB ser vs. Caixabank SA ADR
Performance |
| Timeline |
| Investor AB ser |
| Caixabank SA ADR |
Investor and Caixabank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Caixabank
The main advantage of trading using opposite Investor and Caixabank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Caixabank 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 Caixabank will offset losses from the drop in Caixabank's long position.| Investor vs. Starfleet Innotech | Investor vs. Flow Capital Corp | Investor vs. Blackhawk Growth Corp | Investor vs. AGF Management Limited |
| Caixabank vs. Lloyds Banking Group | Caixabank vs. Western Alliance Bancorporation | Caixabank vs. JAPAN POST BANK |
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 Stocks Directory module to find actively traded stocks across global markets.
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