Correlation Between Grupo Aval and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and BBVA Banco 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 Grupo Aval and BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval and BBVA Banco Frances, you can compare the effects of market volatilities on Grupo Aval and BBVA Banco 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 Grupo Aval with a short position of BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and BBVA Banco.
Diversification Opportunities for Grupo Aval and BBVA Banco
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and BBVA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances and Grupo Aval 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 Grupo Aval are associated (or correlated) with BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Grupo Aval i.e., Grupo Aval and BBVA Banco go up and down completely randomly.
Pair Corralation between Grupo Aval and BBVA Banco
Given the investment horizon of 90 days Grupo Aval is expected to generate 0.84 times more return on investment than BBVA Banco. However, Grupo Aval is 1.2 times less risky than BBVA Banco. It trades about 0.36 of its potential returns per unit of risk. BBVA Banco Frances is currently generating about -0.07 per unit of risk. If you would invest 224.00 in Grupo Aval on November 18, 2024 and sell it today you would earn a total of 59.00 from holding Grupo Aval or generate 26.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval vs. BBVA Banco Frances
Performance |
| Timeline |
| Grupo Aval |
| BBVA Banco Frances |
Grupo Aval and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and BBVA Banco
The main advantage of trading using opposite Grupo Aval and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| Grupo Aval vs. Banco De Chile | Grupo Aval vs. Banco Santander Chile | Grupo Aval vs. Credicorp | Grupo Aval vs. Foreign Trade Bank |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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