Correlation Between BBVA Banco and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Pampa Energia 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 Pampa Energia 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 Pampa Energia SA, you can compare the effects of market volatilities on BBVA Banco and Pampa Energia 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 Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Pampa Energia.
Diversification Opportunities for BBVA Banco and Pampa Energia
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BBVA and Pampa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Pampa Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energia 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 Pampa Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energia SA has no effect on the direction of BBVA Banco i.e., BBVA Banco and Pampa Energia go up and down completely randomly.
Pair Corralation between BBVA Banco and Pampa Energia
Assuming the 90 days trading horizon BBVA Banco is expected to generate 1.25 times less return on investment than Pampa Energia. In addition to that, BBVA Banco is 2.1 times more volatile than Pampa Energia SA. It trades about 0.24 of its total potential returns per unit of risk. Pampa Energia SA is currently generating about 0.64 per unit of volatility. If you would invest 312,000 in Pampa Energia SA on August 27, 2024 and sell it today you would earn a total of 59,000 from holding Pampa Energia SA or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Pampa Energia SA
Performance |
| Timeline |
| BBVA Banco Frances |
| Pampa Energia SA |
BBVA Banco and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Pampa Energia
The main advantage of trading using opposite BBVA Banco and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Pampa Energia 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 Pampa Energia will offset losses from the drop in Pampa Energia's long position.| BBVA Banco vs. Pampa Energia SA | BBVA Banco vs. American Express Co | BBVA Banco vs. United States Steel | BBVA Banco vs. Pfizer Inc |
| Pampa Energia vs. United States Steel | Pampa Energia vs. Pfizer Inc | Pampa Energia vs. Distribuidora de Gas | Pampa Energia vs. IRSA Propiedades Comerciales |
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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