Correlation Between BANKINTER ADR and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both BANKINTER ADR and STEEL DYNAMICS 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 ADR and STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANKINTER ADR 2007 and STEEL DYNAMICS, you can compare the effects of market volatilities on BANKINTER ADR and STEEL DYNAMICS 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 ADR with a short position of STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANKINTER ADR and STEEL DYNAMICS.
Diversification Opportunities for BANKINTER ADR and STEEL DYNAMICS
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANKINTER and STEEL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BANKINTER ADR 2007 and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS and BANKINTER ADR 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 ADR 2007 are associated (or correlated) with STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of BANKINTER ADR i.e., BANKINTER ADR and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between BANKINTER ADR and STEEL DYNAMICS
Assuming the 90 days horizon BANKINTER ADR 2007 is expected to generate 0.69 times more return on investment than STEEL DYNAMICS. However, BANKINTER ADR 2007 is 1.45 times less risky than STEEL DYNAMICS. It trades about 0.54 of its potential returns per unit of risk. STEEL DYNAMICS is currently generating about 0.29 per unit of risk. If you would invest 705.00 in BANKINTER ADR 2007 on October 23, 2024 and sell it today you would earn a total of 85.00 from holding BANKINTER ADR 2007 or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANKINTER ADR 2007 vs. STEEL DYNAMICS
Performance |
| Timeline |
| BANKINTER ADR 2007 |
| STEEL DYNAMICS |
BANKINTER ADR and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANKINTER ADR and STEEL DYNAMICS
The main advantage of trading using opposite BANKINTER ADR and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANKINTER ADR position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| BANKINTER ADR vs. Apple Inc | BANKINTER ADR vs. Apple Inc | BANKINTER ADR vs. Apple Inc | BANKINTER ADR vs. Apple Inc |
| STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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