Correlation Between BBVA Banco and Principal Financial
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Principal Financial 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 Principal Financial 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 Principal Financial Group, you can compare the effects of market volatilities on BBVA Banco and Principal Financial 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 Principal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Principal Financial.
Diversification Opportunities for BBVA Banco and Principal Financial
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between BBVA and Principal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial 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 Principal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Financial has no effect on the direction of BBVA Banco i.e., BBVA Banco and Principal Financial go up and down completely randomly.
Pair Corralation between BBVA Banco and Principal Financial
Assuming the 90 days horizon BBVA Banco Frances is expected to under-perform the Principal Financial. In addition to that, BBVA Banco is 3.1 times more volatile than Principal Financial Group. It trades about -0.16 of its total potential returns per unit of risk. Principal Financial Group is currently generating about -0.14 per unit of volatility. If you would invest 8,100 in Principal Financial Group on December 11, 2024 and sell it today you would lose (350.00) from holding Principal Financial Group or give up 4.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Principal Financial Group
Performance |
| Timeline |
| BBVA Banco Frances |
| Principal Financial |
BBVA Banco and Principal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Principal Financial
The main advantage of trading using opposite BBVA Banco and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Principal Financial 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 Principal Financial will offset losses from the drop in Principal Financial's long position.| BBVA Banco vs. BLUESCOPE STEEL | BBVA Banco vs. Tsingtao Brewery | BBVA Banco vs. Monster Beverage Corp | BBVA Banco vs. MAANSHAN IRON H |
| Principal Financial vs. G8 EDUCATION | Principal Financial vs. Grand Canyon Education | Principal Financial vs. Meiko Electronics Co | Principal Financial vs. EMBARK EDUCATION LTD |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |