Correlation Between BBVA Banco and TRADEGATE
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and TRADEGATE 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 TRADEGATE 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 TRADEGATE, you can compare the effects of market volatilities on BBVA Banco and TRADEGATE 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 TRADEGATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and TRADEGATE.
Diversification Opportunities for BBVA Banco and TRADEGATE
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BBVA and TRADEGATE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and TRADEGATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRADEGATE 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 TRADEGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRADEGATE has no effect on the direction of BBVA Banco i.e., BBVA Banco and TRADEGATE go up and down completely randomly.
Pair Corralation between BBVA Banco and TRADEGATE
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 25.45 times more return on investment than TRADEGATE. However, BBVA Banco is 25.45 times more volatile than TRADEGATE. It trades about 0.31 of its potential returns per unit of risk. TRADEGATE is currently generating about 0.32 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. TRADEGATE
Performance |
| Timeline |
| BBVA Banco Frances |
| TRADEGATE |
BBVA Banco and TRADEGATE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and TRADEGATE
The main advantage of trading using opposite BBVA Banco and TRADEGATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, TRADEGATE 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 TRADEGATE will offset losses from the drop in TRADEGATE'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 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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