Correlation Between Bolsas Y and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Bolsas Y and BBVA Banco 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 Bolsas Y and BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bolsas y Mercados and BBVA Banco Frances, you can compare the effects of market volatilities on Bolsas Y and BBVA Banco 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 Bolsas Y with a short position of BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolsas Y and BBVA Banco.
Diversification Opportunities for Bolsas Y and BBVA Banco
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bolsas and BBVA is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Bolsas y Mercados and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances and Bolsas Y 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 Bolsas y Mercados are associated (or correlated) with BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Bolsas Y i.e., Bolsas Y and BBVA Banco go up and down completely randomly.
Pair Corralation between Bolsas Y and BBVA Banco
Assuming the 90 days trading horizon Bolsas Y is expected to generate 2.81 times less return on investment than BBVA Banco. But when comparing it to its historical volatility, Bolsas y Mercados is 1.34 times less risky than BBVA Banco. It trades about 0.14 of its potential returns per unit of risk. BBVA Banco Frances is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 667,000 in BBVA Banco Frances on October 20, 2024 and sell it today you would earn a total of 196,000 from holding BBVA Banco Frances or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bolsas y Mercados vs. BBVA Banco Frances
Performance |
| Timeline |
| Bolsas y Mercados |
| BBVA Banco Frances |
Bolsas Y and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bolsas Y and BBVA Banco
The main advantage of trading using opposite Bolsas Y and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bolsas Y position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| Bolsas Y vs. Walmart | Bolsas Y vs. Ledesma SAAI | Bolsas Y vs. BBVA Banco Frances | Bolsas Y vs. Transportadora de Gas |
| BBVA Banco vs. American Express Co | BBVA Banco vs. QUALCOMM Incorporated | BBVA Banco vs. United States Steel | BBVA Banco vs. Pfizer Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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