Correlation Between BBVA Banco and Transportadora
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on BBVA Banco and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Transportadora.
Diversification Opportunities for BBVA Banco and Transportadora
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBVA and Transportadora is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of BBVA Banco i.e., BBVA Banco and Transportadora go up and down completely randomly.
Pair Corralation between BBVA Banco and Transportadora
Assuming the 90 days trading horizon BBVA Banco Frances is expected to generate 1.28 times more return on investment than Transportadora. However, BBVA Banco is 1.28 times more volatile than Transportadora de Gas. It trades about 0.07 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.05 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. Transportadora de Gas
Performance |
| Timeline |
| BBVA Banco Frances |
| Transportadora de Gas |
BBVA Banco and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Transportadora
The main advantage of trading using opposite BBVA Banco and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora'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 |
| Transportadora vs. Naturgy BAN SA | Transportadora vs. Distribuidora de Gas | Transportadora vs. International Business Machines |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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