Correlation Between Banco Bilbao and Natwest Group
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and Natwest Group 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 Natwest Group 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 Natwest Group PLC, you can compare the effects of market volatilities on Banco Bilbao and Natwest Group 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 Natwest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Natwest Group.
Diversification Opportunities for Banco Bilbao and Natwest Group
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Banco and Natwest is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and Natwest Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natwest Group PLC 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 Natwest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natwest Group PLC has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Natwest Group go up and down completely randomly.
Pair Corralation between Banco Bilbao and Natwest Group
Given the investment horizon of 90 days Banco Bilbao Viscaya is expected to generate 0.95 times more return on investment than Natwest Group. However, Banco Bilbao Viscaya is 1.05 times less risky than Natwest Group. It trades about 0.08 of its potential returns per unit of risk. Natwest Group PLC is currently generating about 0.07 per unit of risk. If you would invest 513.00 in Banco Bilbao Viscaya on August 23, 2024 and sell it today you would earn a total of 461.00 from holding Banco Bilbao Viscaya or generate 89.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bilbao Viscaya vs. Natwest Group PLC
Performance |
| Timeline |
| Banco Bilbao Viscaya |
| Natwest Group PLC |
Banco Bilbao and Natwest Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and Natwest Group
The main advantage of trading using opposite Banco Bilbao and Natwest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, Natwest Group 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 Natwest Group will offset losses from the drop in Natwest Group'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 |
| Natwest Group vs. ING Group NV | Natwest Group vs. HSBC Holdings PLC | Natwest Group vs. Banco Santander SA | Natwest Group vs. UBS Group AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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