Correlation Between BBVA Banco and National Retail
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and National Retail 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 National Retail 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 National Retail Properties, you can compare the effects of market volatilities on BBVA Banco and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and National Retail.
Diversification Opportunities for BBVA Banco and National Retail
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBVA and National is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of BBVA Banco i.e., BBVA Banco and National Retail go up and down completely randomly.
Pair Corralation between BBVA Banco and National Retail
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 2.1 times more return on investment than National Retail. However, BBVA Banco is 2.1 times more volatile than National Retail Properties. It trades about 0.31 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.13 per unit of risk. If you would invest 1,200 in BBVA Banco Frances on September 3, 2024 and sell it today you would earn a total of 350.00 from holding BBVA Banco Frances or generate 29.17% 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. National Retail Properties
Performance |
| Timeline |
| BBVA Banco Frances |
| National Retail Prop |
BBVA Banco and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and National Retail
The main advantage of trading using opposite BBVA Banco and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.| BBVA Banco vs. Ross Stores | BBVA Banco vs. Costco Wholesale Corp | BBVA Banco vs. AEON STORES | BBVA Banco vs. Retail Estates NV |
| National Retail vs. QBE Insurance Group | National Retail vs. United Natural Foods | National Retail vs. TYSON FOODS A | National Retail vs. Luckin Coffee |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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