Correlation Between BBVA Banco and Swatch
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Swatch 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 Swatch 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 The Swatch Group, you can compare the effects of market volatilities on BBVA Banco and Swatch 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 Swatch. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Swatch.
Diversification Opportunities for BBVA Banco and Swatch
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBVA and Swatch is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of BBVA Banco i.e., BBVA Banco and Swatch go up and down completely randomly.
Pair Corralation between BBVA Banco and Swatch
Assuming the 90 days horizon BBVA Banco Frances is expected to generate 1.41 times more return on investment than Swatch. However, BBVA Banco is 1.41 times more volatile than The Swatch Group. It trades about 0.03 of its potential returns per unit of risk. The Swatch Group is currently generating about -0.01 per unit of risk. If you would invest 1,550 in BBVA Banco Frances on September 26, 2024 and sell it today you would earn a total of 10.00 from holding BBVA Banco Frances or generate 0.65% 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. The Swatch Group
Performance |
| Timeline |
| BBVA Banco Frances |
| Swatch Group |
BBVA Banco and Swatch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Swatch
The main advantage of trading using opposite BBVA Banco and Swatch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Swatch 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 Swatch will offset losses from the drop in Swatch's long position.| BBVA Banco vs. POSBO UNSPADRS20YC1 | BBVA Banco vs. Postal Savings Bank | BBVA Banco vs. Truist Financial | BBVA Banco vs. OVERSEA CHINUNSPADR2 |
| Swatch vs. LVMH Mot Hennessy | Swatch vs. Herms International Socit | Swatch vs. CHRISTIAN DIOR ADR14EO2 | Swatch vs. Christian Dior SE |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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