Correlation Between Banco Bilbao and Bank of Communications Co
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and Bank of Communications Co 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 Bank of Communications Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Viscaya and Bank of Communications, you can compare the effects of market volatilities on Banco Bilbao and Bank of Communications Co 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 Bank of Communications Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Bank of Communications Co.
Diversification Opportunities for Banco Bilbao and Bank of Communications Co
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and Bank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and Bank of Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Communications Co 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 Viscaya are associated (or correlated) with Bank of Communications Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Communications Co has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Bank of Communications Co go up and down completely randomly.
Pair Corralation between Banco Bilbao and Bank of Communications Co
Given the investment horizon of 90 days Banco Bilbao Viscaya is expected to generate 0.73 times more return on investment than Bank of Communications Co. However, Banco Bilbao Viscaya is 1.36 times less risky than Bank of Communications Co. It trades about 0.34 of its potential returns per unit of risk. Bank of Communications is currently generating about 0.14 per unit of risk. If you would invest 945.00 in Banco Bilbao Viscaya on November 29, 2024 and sell it today you would earn a total of 394.00 from holding Banco Bilbao Viscaya or generate 41.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.36% |
| Values | Daily Returns |
Banco Bilbao Viscaya vs. Bank of Communications
Performance |
| Timeline |
| Banco Bilbao Viscaya |
| Bank of Communications Co |
Banco Bilbao and Bank of Communications Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and Bank of Communications Co
The main advantage of trading using opposite Banco Bilbao and Bank of Communications Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, Bank of Communications Co 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 Bank of Communications Co will offset losses from the drop in Bank of Communications Co's long position.| Banco Bilbao vs. Barclays PLC ADR | Banco Bilbao vs. ING Group NV | Banco Bilbao vs. Banco Santander SA | Banco Bilbao vs. HSBC Holdings PLC |
| Bank of Communications Co vs. Bank of China | Bank of Communications Co vs. Bank of America | Bank of Communications Co vs. ABN AMRO Bank | Bank of Communications Co vs. Banco Bilbao Viscaya |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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