Correlation Between BBVA Banco and HOKURIKU
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and HOKURIKU 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 HOKURIKU 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 HOKURIKU EL PWR, you can compare the effects of market volatilities on BBVA Banco and HOKURIKU 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 HOKURIKU. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and HOKURIKU.
Diversification Opportunities for BBVA Banco and HOKURIKU
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BBVA and HOKURIKU is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and HOKURIKU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOKURIKU EL PWR 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 HOKURIKU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOKURIKU EL PWR has no effect on the direction of BBVA Banco i.e., BBVA Banco and HOKURIKU go up and down completely randomly.
Pair Corralation between BBVA Banco and HOKURIKU
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 3.18 times more return on investment than HOKURIKU. However, BBVA Banco is 3.18 times more volatile than HOKURIKU EL PWR. It trades about 0.17 of its potential returns per unit of risk. HOKURIKU EL PWR is currently generating about -0.05 per unit of risk. If you would invest 1,810 in BBVA Banco Frances on November 2, 2024 and sell it today you would earn a total of 330.00 from holding BBVA Banco Frances or generate 18.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BBVA Banco Frances vs. HOKURIKU EL PWR
Performance |
| Timeline |
| BBVA Banco Frances |
| HOKURIKU EL PWR |
BBVA Banco and HOKURIKU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and HOKURIKU
The main advantage of trading using opposite BBVA Banco and HOKURIKU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, HOKURIKU 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 HOKURIKU will offset losses from the drop in HOKURIKU's long position.| BBVA Banco vs. POSBO UNSPADRS20YC1 | BBVA Banco vs. Postal Savings Bank | BBVA Banco vs. Truist Financial | BBVA Banco vs. OVERSEA CHINUNSPADR2 |
| HOKURIKU vs. Ormat Technologies | HOKURIKU vs. Neoen SA | HOKURIKU vs. Encavis AG | HOKURIKU vs. TOHOKU EL PWR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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