Correlation Between Major Drilling and Bankinter
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Bankinter 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 Major Drilling and Bankinter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Bankinter SA, you can compare the effects of market volatilities on Major Drilling and Bankinter 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 Major Drilling with a short position of Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Bankinter.
Diversification Opportunities for Major Drilling and Bankinter
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Major and Bankinter is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Bankinter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA and Major Drilling 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 Major Drilling Group are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA has no effect on the direction of Major Drilling i.e., Major Drilling and Bankinter go up and down completely randomly.
Pair Corralation between Major Drilling and Bankinter
Assuming the 90 days horizon Major Drilling is expected to generate 1.75 times less return on investment than Bankinter. In addition to that, Major Drilling is 1.54 times more volatile than Bankinter SA. It trades about 0.06 of its total potential returns per unit of risk. Bankinter SA is currently generating about 0.16 per unit of volatility. If you would invest 710.00 in Bankinter SA on August 31, 2024 and sell it today you would earn a total of 41.00 from holding Bankinter SA or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Bankinter SA
Performance |
| Timeline |
| Major Drilling Group |
| Bankinter SA |
Major Drilling and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Bankinter
The main advantage of trading using opposite Major Drilling and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.| Major Drilling vs. BHP Group Limited | Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Rio Tinto Group |
| Bankinter vs. Diamyd Medical AB | Bankinter vs. Titan Machinery | Bankinter vs. DAIRY FARM INTL | Bankinter vs. TITAN MACHINERY |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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