Correlation Between BBVA Banco and Consultatio
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Consultatio 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 Consultatio 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 Consultatio SA, you can compare the effects of market volatilities on BBVA Banco and Consultatio 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 Consultatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Consultatio.
Diversification Opportunities for BBVA Banco and Consultatio
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BBVA and Consultatio is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Consultatio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consultatio 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 Consultatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consultatio SA has no effect on the direction of BBVA Banco i.e., BBVA Banco and Consultatio go up and down completely randomly.
Pair Corralation between BBVA Banco and Consultatio
Assuming the 90 days trading horizon BBVA Banco Frances is expected to generate 1.22 times more return on investment than Consultatio. However, BBVA Banco is 1.22 times more volatile than Consultatio SA. It trades about 0.13 of its potential returns per unit of risk. Consultatio SA is currently generating about 0.06 per unit of risk. If you would invest 386,250 in BBVA Banco Frances on September 1, 2024 and sell it today you would earn a total of 230,750 from holding BBVA Banco Frances or generate 59.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Consultatio SA
Performance |
| Timeline |
| BBVA Banco Frances |
| Consultatio SA |
BBVA Banco and Consultatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Consultatio
The main advantage of trading using opposite BBVA Banco and Consultatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Consultatio 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 Consultatio will offset losses from the drop in Consultatio's long position.| BBVA Banco vs. Edesa Holding SA | BBVA Banco vs. Longvie SA | BBVA Banco vs. American Express Co | BBVA Banco vs. United States Steel |
| Consultatio vs. Transportadora de Gas | Consultatio vs. Agrometal SAI | Consultatio vs. Harmony Gold Mining | Consultatio vs. United States Steel |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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