Correlation Between Bankinter and Powercell Sweden
Can any of the company-specific risk be diversified away by investing in both Bankinter and Powercell Sweden 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 Powercell Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankinter SA and Powercell Sweden, you can compare the effects of market volatilities on Bankinter and Powercell Sweden 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 Powercell Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankinter and Powercell Sweden.
Diversification Opportunities for Bankinter and Powercell Sweden
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bankinter and Powercell is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter SA and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden 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 are associated (or correlated) with Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of Bankinter i.e., Bankinter and Powercell Sweden go up and down completely randomly.
Pair Corralation between Bankinter and Powercell Sweden
Assuming the 90 days trading horizon Bankinter SA is expected to generate 0.31 times more return on investment than Powercell Sweden. However, Bankinter SA is 3.19 times less risky than Powercell Sweden. It trades about 0.3 of its potential returns per unit of risk. Powercell Sweden is currently generating about -0.17 per unit of risk. If you would invest 747.00 in Bankinter SA on November 3, 2024 and sell it today you would earn a total of 68.00 from holding Bankinter SA or generate 9.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankinter SA vs. Powercell Sweden
Performance |
| Timeline |
| Bankinter SA |
| Powercell Sweden |
Bankinter and Powercell Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankinter and Powercell Sweden
The main advantage of trading using opposite Bankinter and Powercell Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankinter position performs unexpectedly, Powercell Sweden 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 Powercell Sweden will offset losses from the drop in Powercell Sweden's long position.The idea behind Bankinter SA and Powercell Sweden 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.| Powercell Sweden vs. PLANT VEDA FOODS | Powercell Sweden vs. Suntory Beverage Food | Powercell Sweden vs. STEEL DYNAMICS | Powercell Sweden vs. MOUNT GIBSON IRON |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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