Correlation Between BBVA Banco and Molinos Juan
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Molinos Juan 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 Molinos Juan 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 Molinos Juan Semino, you can compare the effects of market volatilities on BBVA Banco and Molinos Juan 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 Molinos Juan. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Molinos Juan.
Diversification Opportunities for BBVA Banco and Molinos Juan
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BBVA and Molinos is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Molinos Juan Semino in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Juan Semino 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 Molinos Juan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Juan Semino has no effect on the direction of BBVA Banco i.e., BBVA Banco and Molinos Juan go up and down completely randomly.
Pair Corralation between BBVA Banco and Molinos Juan
Assuming the 90 days trading horizon BBVA Banco Frances is expected to generate 0.48 times more return on investment than Molinos Juan. However, BBVA Banco Frances is 2.07 times less risky than Molinos Juan. It trades about 0.19 of its potential returns per unit of risk. Molinos Juan Semino is currently generating about -0.08 per unit of risk. If you would invest 455,000 in BBVA Banco Frances on November 2, 2024 and sell it today you would earn a total of 440,000 from holding BBVA Banco Frances or generate 96.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Molinos Juan Semino
Performance |
| Timeline |
| BBVA Banco Frances |
| Molinos Juan Semino |
BBVA Banco and Molinos Juan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Molinos Juan
The main advantage of trading using opposite BBVA Banco and Molinos Juan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Molinos Juan 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 Molinos Juan will offset losses from the drop in Molinos Juan'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 |
| Molinos Juan vs. Ledesma SAAI | Molinos Juan vs. Boldt SA | Molinos Juan vs. Agrometal SAI | Molinos Juan 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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