Correlation Between BBVA Banco and Cresud SA
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Cresud SA 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 Cresud SA 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 Cresud SA, you can compare the effects of market volatilities on BBVA Banco and Cresud SA 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 Cresud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Cresud SA.
Diversification Opportunities for BBVA Banco and Cresud SA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBVA and Cresud is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud SA 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 Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of BBVA Banco i.e., BBVA Banco and Cresud SA go up and down completely randomly.
Pair Corralation between BBVA Banco and Cresud SA
Assuming the 90 days trading horizon BBVA Banco Frances is expected to generate 1.71 times more return on investment than Cresud SA. However, BBVA Banco is 1.71 times more volatile than Cresud SA. It trades about 0.07 of its potential returns per unit of risk. Cresud SA is currently generating about -0.02 per unit of risk. If you would invest 857,000 in BBVA Banco Frances on November 2, 2024 and sell it today you would earn a total of 38,000 from holding BBVA Banco Frances or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Cresud SA
Performance |
| Timeline |
| BBVA Banco Frances |
| Cresud SA |
BBVA Banco and Cresud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Cresud SA
The main advantage of trading using opposite BBVA Banco and Cresud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Cresud SA 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 Cresud SA will offset losses from the drop in Cresud SA's long position.| BBVA Banco vs. Agrometal SAI | BBVA Banco vs. Transportadora de Gas | BBVA Banco vs. International Business Machines | BBVA Banco vs. Grimoldi SA |
| Cresud SA vs. Harmony Gold Mining | Cresud SA vs. United States Steel | Cresud SA vs. Transportadora de Gas | Cresud SA vs. Telecom Argentina |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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