Correlation Between BBVA Banco and SIDETRADE
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and SIDETRADE 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 SIDETRADE 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 SIDETRADE EO 1, you can compare the effects of market volatilities on BBVA Banco and SIDETRADE 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 SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and SIDETRADE.
Diversification Opportunities for BBVA Banco and SIDETRADE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBVA and SIDETRADE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 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 SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of BBVA Banco i.e., BBVA Banco and SIDETRADE go up and down completely randomly.
Pair Corralation between BBVA Banco and SIDETRADE
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 3.33 times more return on investment than SIDETRADE. However, BBVA Banco is 3.33 times more volatile than SIDETRADE EO 1. It trades about 0.29 of its potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.1 per unit of risk. If you would invest 1,190 in BBVA Banco Frances on September 1, 2024 and sell it today you would earn a total of 360.00 from holding BBVA Banco Frances or generate 30.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BBVA Banco Frances vs. SIDETRADE EO 1
Performance |
| Timeline |
| BBVA Banco Frances |
| SIDETRADE EO 1 |
BBVA Banco and SIDETRADE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and SIDETRADE
The main advantage of trading using opposite BBVA Banco and SIDETRADE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, SIDETRADE 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 SIDETRADE will offset losses from the drop in SIDETRADE's long position.| BBVA Banco vs. National Beverage Corp | BBVA Banco vs. SIDETRADE EO 1 | BBVA Banco vs. National Retail Properties | BBVA Banco vs. SALESFORCE INC CDR |
| SIDETRADE vs. CANON MARKETING JP | SIDETRADE vs. Tradeweb Markets | SIDETRADE vs. Entravision Communications | SIDETRADE vs. Tower One Wireless |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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