Correlation Between Caixabank and Lingotes
Can any of the company-specific risk be diversified away by investing in both Caixabank and Lingotes 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 Caixabank and Lingotes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA and Lingotes, you can compare the effects of market volatilities on Caixabank and Lingotes 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 Caixabank with a short position of Lingotes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Lingotes.
Diversification Opportunities for Caixabank and Lingotes
Very good diversification
The 3 months correlation between Caixabank and Lingotes is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Lingotes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingotes and Caixabank 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 Caixabank SA are associated (or correlated) with Lingotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingotes has no effect on the direction of Caixabank i.e., Caixabank and Lingotes go up and down completely randomly.
Pair Corralation between Caixabank and Lingotes
Assuming the 90 days trading horizon Caixabank SA is expected to under-perform the Lingotes. In addition to that, Caixabank is 1.24 times more volatile than Lingotes. It trades about -0.1 of its total potential returns per unit of risk. Lingotes is currently generating about -0.09 per unit of volatility. If you would invest 702.00 in Lingotes on August 29, 2024 and sell it today you would lose (26.00) from holding Lingotes or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caixabank SA vs. Lingotes
Performance |
| Timeline |
| Caixabank SA |
| Lingotes |
Caixabank and Lingotes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Lingotes
The main advantage of trading using opposite Caixabank and Lingotes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, Lingotes 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 Lingotes will offset losses from the drop in Lingotes' long position.The idea behind Caixabank SA and Lingotes pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lingotes vs. International Consolidated Airlines | Lingotes vs. Merlin Properties SOCIMI | Lingotes vs. Aena SA | Lingotes vs. Acerinox |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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