Correlation Between Banco Comercial and Galp Energia
Can any of the company-specific risk be diversified away by investing in both Banco Comercial and Galp Energia 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 Comercial and Galp Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Comercial Portugues and Galp Energia SGPS, you can compare the effects of market volatilities on Banco Comercial and Galp Energia 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 Comercial with a short position of Galp Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Comercial and Galp Energia.
Diversification Opportunities for Banco Comercial and Galp Energia
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Galp is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Banco Comercial Portugues and Galp Energia SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galp Energia SGPS and Banco Comercial 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 Comercial Portugues are associated (or correlated) with Galp Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galp Energia SGPS has no effect on the direction of Banco Comercial i.e., Banco Comercial and Galp Energia go up and down completely randomly.
Pair Corralation between Banco Comercial and Galp Energia
Assuming the 90 days trading horizon Banco Comercial Portugues is expected to generate 0.94 times more return on investment than Galp Energia. However, Banco Comercial Portugues is 1.06 times less risky than Galp Energia. It trades about 0.21 of its potential returns per unit of risk. Galp Energia SGPS is currently generating about -0.11 per unit of risk. If you would invest 50.00 in Banco Comercial Portugues on December 10, 2024 and sell it today you would earn a total of 5.00 from holding Banco Comercial Portugues or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Comercial Portugues vs. Galp Energia SGPS
Performance |
| Timeline |
| Banco Comercial Portugues |
| Galp Energia SGPS |
Banco Comercial and Galp Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Comercial and Galp Energia
The main advantage of trading using opposite Banco Comercial and Galp Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Comercial position performs unexpectedly, Galp Energia 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 Galp Energia will offset losses from the drop in Galp Energia's long position.| Banco Comercial vs. Sonae SGPS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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