Correlation Between BBVA Banco and Amazon
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Amazon 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 BBVA Banco and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and Amazon Inc, you can compare the effects of market volatilities on BBVA Banco and Amazon 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 BBVA Banco with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Amazon.
Diversification Opportunities for BBVA Banco and Amazon
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BBVA and Amazon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and BBVA Banco 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 BBVA Banco Frances are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of BBVA Banco i.e., BBVA Banco and Amazon go up and down completely randomly.
Pair Corralation between BBVA Banco and Amazon
Assuming the 90 days trading horizon BBVA Banco Frances is expected to generate 3.5 times more return on investment than Amazon. However, BBVA Banco is 3.5 times more volatile than Amazon Inc. It trades about 0.3 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.16 per unit of risk. If you would invest 667,000 in BBVA Banco Frances on October 20, 2024 and sell it today you would earn a total of 196,000 from holding BBVA Banco Frances or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Amazon Inc
Performance |
| Timeline |
| BBVA Banco Frances |
| Amazon Inc |
BBVA Banco and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Amazon
The main advantage of trading using opposite BBVA Banco and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| BBVA Banco vs. American Express Co | BBVA Banco vs. QUALCOMM Incorporated | BBVA Banco vs. United States Steel | BBVA Banco vs. Pfizer Inc |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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