Correlation Between Bankinter and Bank of East

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

By analyzing existing cross correlation between Bankinter SA ADR and Bank of East, you can compare the effects of market volatilities on Bankinter and Bank of East 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 Bankinter with a short position of Bank of East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankinter and Bank of East.

Diversification Opportunities for Bankinter and Bank of East

-0.3

Correlation Coefficient

Bankinter  Bank of East

Very good diversification

The 3 months correlation between Bankinter and Bank is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter SA ADR and Bank of East in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of East and Bankinter 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 Bankinter SA ADR are associated (or correlated) with Bank of East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of East has no effect on the direction of Bankinter i.e., Bankinter and Bank of East go up and down completely randomly.

Pair Corralation between Bankinter and Bank of East

Assuming the 90 days horizon Bankinter SA ADR is expected to under-perform the Bank of East. In addition to that, Bankinter is 1.67 times more volatile than Bank of East. It trades about -0.06 of its total potential returns per unit of risk. Bank of East is currently generating about 0.01 per unit of volatility. If you would invest  125.00  in Bank of East on August 9, 2024 and sell it today you would earn a total of  0.00  from holding Bank of East or generate 0.0% return on investment over 90 days.

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

Bankinter SA ADR  vs.  Bank of East

Bankinter SA ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bankinter SA ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Bankinter showed solid returns over the last few months and may actually be approaching a breakup point.

Bank of East

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of East are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Bank of East showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bankinter and Bank of East

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

The idea behind Bankinter SA ADR and Bank of East 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.