Correlation Between BBVA Banco and BASF SE
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and BASF SE 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 BASF SE 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 BASF SE, you can compare the effects of market volatilities on BBVA Banco and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and BASF SE.
Diversification Opportunities for BBVA Banco and BASF SE
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBVA and BASF is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of BBVA Banco i.e., BBVA Banco and BASF SE go up and down completely randomly.
Pair Corralation between BBVA Banco and BASF SE
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 3.12 times more return on investment than BASF SE. However, BBVA Banco is 3.12 times more volatile than BASF SE. It trades about 0.12 of its potential returns per unit of risk. BASF SE is currently generating about 0.02 per unit of risk. If you would invest 351.00 in BBVA Banco Frances on September 12, 2024 and sell it today you would earn a total of 1,239 from holding BBVA Banco Frances or generate 352.99% 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. BASF SE
Performance |
| Timeline |
| BBVA Banco Frances |
| BASF SE |
BBVA Banco and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and BASF SE
The main advantage of trading using opposite BBVA Banco and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| BBVA Banco vs. SHIP HEALTHCARE HLDGINC | BBVA Banco vs. RETAIL FOOD GROUP | BBVA Banco vs. Fast Retailing Co | BBVA Banco vs. Caseys General Stores |
| BASF SE vs. PREMIER FOODS | BASF SE vs. COFCO Joycome Foods | BASF SE vs. LIFEWAY FOODS | BASF SE vs. Cal Maine Foods |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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