Correlation Between Caixabank and All Iron
Can any of the company-specific risk be diversified away by investing in both Caixabank and All Iron 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 All Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA and All Iron Re, you can compare the effects of market volatilities on Caixabank and All Iron 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 All Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and All Iron.
Diversification Opportunities for Caixabank and All Iron
Poor diversification
The 3 months correlation between Caixabank and All is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and All Iron Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Iron Re 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 All Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Iron Re has no effect on the direction of Caixabank i.e., Caixabank and All Iron go up and down completely randomly.
Pair Corralation between Caixabank and All Iron
Assuming the 90 days trading horizon Caixabank is expected to generate 5.99 times less return on investment than All Iron. In addition to that, Caixabank is 1.55 times more volatile than All Iron Re. It trades about 0.01 of its total potential returns per unit of risk. All Iron Re is currently generating about 0.13 per unit of volatility. If you would invest 1,010 in All Iron Re on August 25, 2024 and sell it today you would earn a total of 40.00 from holding All Iron Re or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caixabank SA vs. All Iron Re
Performance |
| Timeline |
| Caixabank SA |
| All Iron Re |
Caixabank and All Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and All Iron
The main advantage of trading using opposite Caixabank and All Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, All Iron 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 All Iron will offset losses from the drop in All Iron's long position.The idea behind Caixabank SA and All Iron Re 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.| All Iron vs. Plasticos Compuestos SA | All Iron vs. Melia Hotels | All Iron vs. Cellnex Telecom SA | All Iron vs. Arrienda Rental Properties |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |