Correlation Between Banco Bilbao and First Trust

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

By analyzing existing cross correlation between Banco Bilbao Viscaya and First Trust Capital, you can compare the effects of market volatilities on Banco Bilbao and First Trust 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 Banco Bilbao with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and First Trust.

Diversification Opportunities for Banco Bilbao and First Trust

0.79

Correlation Coefficient

Banco Bilbao  First Trust

Poor diversification

The 3 months correlation between Banco and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and First Trust Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Capital and Banco Bilbao 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 Banco Bilbao Viscaya are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Capital has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and First Trust go up and down completely randomly.

Pair Corralation between Banco Bilbao and First Trust

Given the investment horizon of 90 days Banco Bilbao Viscaya is expected to generate 3.13 times more return on investment than First Trust. However, Banco Bilbao is 3.13 times more volatile than First Trust Capital. It trades about 0.19 of its potential returns per unit of risk. First Trust Capital is currently generating about 0.07 per unit of risk. If you would invest  1,574  in Banco Bilbao Viscaya on July 8, 2025 and sell it today you would earn a total of  351.00  from holding Banco Bilbao Viscaya or generate 22.3% return on investment over 90 days.

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

Banco Bilbao Viscaya  vs.  First Trust Capital

Banco Bilbao Viscaya

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Bilbao Viscaya are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Banco Bilbao sustained solid returns over the last few months and may actually be approaching a breakup point.

First Trust Capital

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Banco Bilbao and First Trust

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

The idea behind Banco Bilbao Viscaya and First Trust Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.