Correlation Between Caixabank and Repsol
Can any of the company-specific risk be diversified away by investing in both Caixabank and Repsol 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 Repsol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA and Repsol, you can compare the effects of market volatilities on Caixabank and Repsol 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 Repsol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Repsol.
Diversification Opportunities for Caixabank and Repsol
Very good diversification
The 3 months correlation between Caixabank and Repsol is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of Caixabank i.e., Caixabank and Repsol go up and down completely randomly.
Pair Corralation between Caixabank and Repsol
Assuming the 90 days trading horizon Caixabank SA is expected to under-perform the Repsol. In addition to that, Caixabank is 1.71 times more volatile than Repsol. It trades about -0.08 of its total potential returns per unit of risk. Repsol is currently generating about 0.03 per unit of volatility. If you would invest 1,181 in Repsol on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Repsol or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caixabank SA vs. Repsol
Performance |
| Timeline |
| Caixabank SA |
| Repsol |
Caixabank and Repsol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Repsol
The main advantage of trading using opposite Caixabank and Repsol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, Repsol 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 Repsol will offset losses from the drop in Repsol's long position.| Caixabank vs. Banco de Sabadell | Caixabank vs. Banco Santander | Caixabank vs. Bankinter | Caixabank vs. Repsol |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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