Correlation Between BBVA Banco and MR BRICOLAGE
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and MR BRICOLAGE 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 BBVA Banco and MR BRICOLAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and MR BRICOLAGE INH, you can compare the effects of market volatilities on BBVA Banco and MR BRICOLAGE 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 BBVA Banco with a short position of MR BRICOLAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and MR BRICOLAGE.
Diversification Opportunities for BBVA Banco and MR BRICOLAGE
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBVA and 4OL is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and MR BRICOLAGE INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MR BRICOLAGE INH and BBVA Banco 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 BBVA Banco Frances are associated (or correlated) with MR BRICOLAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MR BRICOLAGE INH has no effect on the direction of BBVA Banco i.e., BBVA Banco and MR BRICOLAGE go up and down completely randomly.
Pair Corralation between BBVA Banco and MR BRICOLAGE
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 4.83 times more return on investment than MR BRICOLAGE. However, BBVA Banco is 4.83 times more volatile than MR BRICOLAGE INH. It trades about 0.23 of its potential returns per unit of risk. MR BRICOLAGE INH is currently generating about -0.05 per unit of risk. If you would invest 815.00 in BBVA Banco Frances on August 29, 2024 and sell it today you would earn a total of 685.00 from holding BBVA Banco Frances or generate 84.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. MR BRICOLAGE INH
Performance |
| Timeline |
| BBVA Banco Frances |
| MR BRICOLAGE INH |
BBVA Banco and MR BRICOLAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and MR BRICOLAGE
The main advantage of trading using opposite BBVA Banco and MR BRICOLAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, MR BRICOLAGE 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 MR BRICOLAGE will offset losses from the drop in MR BRICOLAGE's long position.| BBVA Banco vs. LION ONE METALS | BBVA Banco vs. Jacquet Metal Service | BBVA Banco vs. Harmony Gold Mining | BBVA Banco vs. THAI BEVERAGE |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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