Correlation Between Banco Bilbao and Realia
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and Realia 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 Banco Bilbao and Realia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Vizcaya and Realia, you can compare the effects of market volatilities on Banco Bilbao and Realia 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 Banco Bilbao with a short position of Realia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Realia.
Diversification Opportunities for Banco Bilbao and Realia
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Realia is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Vizcaya and Realia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realia and Banco Bilbao 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 Banco Bilbao Vizcaya are associated (or correlated) with Realia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realia has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Realia go up and down completely randomly.
Pair Corralation between Banco Bilbao and Realia
Assuming the 90 days trading horizon Banco Bilbao is expected to generate 1.44 times less return on investment than Realia. In addition to that, Banco Bilbao is 2.65 times more volatile than Realia. It trades about 0.03 of its total potential returns per unit of risk. Realia is currently generating about 0.11 per unit of volatility. If you would invest 98.00 in Realia on August 24, 2024 and sell it today you would earn a total of 2.00 from holding Realia or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Banco Bilbao Vizcaya vs. Realia
Performance |
| Timeline |
| Banco Bilbao Vizcaya |
| Realia |
Banco Bilbao and Realia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and Realia
The main advantage of trading using opposite Banco Bilbao and Realia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, Realia 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 Realia will offset losses from the drop in Realia's long position.| Banco Bilbao vs. Banco Santander | Banco Bilbao vs. Repsol | Banco Bilbao vs. Telefonica | Banco Bilbao vs. Iberdrola SA |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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