Correlation Between Caixabank and Realia
Can any of the company-specific risk be diversified away by investing in both Caixabank and Realia 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 Realia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA and Realia, you can compare the effects of market volatilities on Caixabank and Realia 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 Realia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Realia.
Diversification Opportunities for Caixabank and Realia
Good diversification
The 3 months correlation between Caixabank and Realia is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Realia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realia 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 Realia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realia has no effect on the direction of Caixabank i.e., Caixabank and Realia go up and down completely randomly.
Pair Corralation between Caixabank and Realia
Assuming the 90 days trading horizon Caixabank SA is expected to generate 2.33 times more return on investment than Realia. However, Caixabank is 2.33 times more volatile than Realia. It trades about 0.07 of its potential returns per unit of risk. Realia is currently generating about 0.11 per unit of risk. If you would invest 532.00 in Caixabank SA on August 24, 2024 and sell it today you would earn a total of 14.00 from holding Caixabank SA or generate 2.63% 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. Realia
Performance |
| Timeline |
| Caixabank SA |
| Realia |
Caixabank and Realia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Realia
The main advantage of trading using opposite Caixabank and Realia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, Realia 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 Realia will offset losses from the drop in Realia's long position.| Caixabank vs. Banco de Sabadell | Caixabank vs. Banco Santander | Caixabank vs. Repsol | Caixabank vs. Mapfre |
| Realia vs. Neinor Homes SLU | Realia vs. Metrovacesa SA | Realia vs. Merlin Properties SOCIMI | Realia vs. Atresmedia Corporacin de |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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