Correlation Between Banco Bilbao and Tecnicas Reunidas
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and Tecnicas Reunidas 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 Tecnicas Reunidas 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 Tecnicas Reunidas, you can compare the effects of market volatilities on Banco Bilbao and Tecnicas Reunidas 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 Tecnicas Reunidas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Tecnicas Reunidas.
Diversification Opportunities for Banco Bilbao and Tecnicas Reunidas
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Tecnicas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Vizcaya and Tecnicas Reunidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnicas Reunidas 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 Tecnicas Reunidas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnicas Reunidas has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Tecnicas Reunidas go up and down completely randomly.
Pair Corralation between Banco Bilbao and Tecnicas Reunidas
Assuming the 90 days trading horizon Banco Bilbao Vizcaya is expected to under-perform the Tecnicas Reunidas. In addition to that, Banco Bilbao is 1.1 times more volatile than Tecnicas Reunidas. It trades about -0.09 of its total potential returns per unit of risk. Tecnicas Reunidas is currently generating about -0.01 per unit of volatility. If you would invest 1,121 in Tecnicas Reunidas on September 2, 2024 and sell it today you would lose (10.00) from holding Tecnicas Reunidas or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bilbao Vizcaya vs. Tecnicas Reunidas
Performance |
| Timeline |
| Banco Bilbao Vizcaya |
| Tecnicas Reunidas |
Banco Bilbao and Tecnicas Reunidas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and Tecnicas Reunidas
The main advantage of trading using opposite Banco Bilbao and Tecnicas Reunidas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, Tecnicas Reunidas 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 Tecnicas Reunidas will offset losses from the drop in Tecnicas Reunidas' long position.| Banco Bilbao vs. Banco Santander | Banco Bilbao vs. Repsol | Banco Bilbao vs. Telefonica | Banco Bilbao vs. Iberdrola SA |
| Tecnicas Reunidas vs. Banco Santander | Tecnicas Reunidas vs. Iberdrola SA | Tecnicas Reunidas vs. Endesa SA | Tecnicas Reunidas vs. Mapfre |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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