Correlation Between Caixabank and Renta Corporacion
Can any of the company-specific risk be diversified away by investing in both Caixabank and Renta Corporacion 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 Renta Corporacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA and Renta Corporacion Real, you can compare the effects of market volatilities on Caixabank and Renta Corporacion 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 Renta Corporacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Renta Corporacion.
Diversification Opportunities for Caixabank and Renta Corporacion
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caixabank and Renta is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Renta Corporacion Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renta Corporacion Real 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 Renta Corporacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renta Corporacion Real has no effect on the direction of Caixabank i.e., Caixabank and Renta Corporacion go up and down completely randomly.
Pair Corralation between Caixabank and Renta Corporacion
Assuming the 90 days trading horizon Caixabank SA is expected to under-perform the Renta Corporacion. But the stock apears to be less risky and, when comparing its historical volatility, Caixabank SA is 1.14 times less risky than Renta Corporacion. The stock trades about -0.13 of its potential returns per unit of risk. The Renta Corporacion Real is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 69.00 in Renta Corporacion Real on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Renta Corporacion Real or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Caixabank SA vs. Renta Corporacion Real
Performance |
| Timeline |
| Caixabank SA |
| Renta Corporacion Real |
Caixabank and Renta Corporacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Renta Corporacion
The main advantage of trading using opposite Caixabank and Renta Corporacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, Renta Corporacion 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 Renta Corporacion will offset losses from the drop in Renta Corporacion's long position.| Caixabank vs. Banco de Sabadell | Caixabank vs. Banco Santander | Caixabank vs. Bankinter | Caixabank vs. Repsol |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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