Correlation Between BBVA Banco and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on BBVA Banco and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Dow Jones.
Diversification Opportunities for BBVA Banco and Dow Jones
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BBVA and Dow is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of BBVA Banco i.e., BBVA Banco and Dow Jones go up and down completely randomly.
Pair Corralation between BBVA Banco and Dow Jones
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 6.61 times more return on investment than Dow Jones. However, BBVA Banco is 6.61 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 323.00 in BBVA Banco Frances on November 5, 2024 and sell it today you would earn a total of 1,797 from holding BBVA Banco Frances or generate 556.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
BBVA Banco Frances vs. Dow Jones Industrial
Performance |
| Timeline |
BBVA Banco and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BBVA Banco Frances
Pair trading matchups for BBVA Banco
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BBVA Banco and Dow Jones
The main advantage of trading using opposite BBVA Banco and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| BBVA Banco vs. ADRIATIC METALS LS 013355 | BBVA Banco vs. Coeur Mining | BBVA Banco vs. Perseus Mining Limited | BBVA Banco vs. Zijin Mining Group |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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