Correlation Between Caixabank and Home Capital
Can any of the company-specific risk be diversified away by investing in both Caixabank and Home Capital 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 Home Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA and Home Capital Rentals, you can compare the effects of market volatilities on Caixabank and Home Capital 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 Home Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Home Capital.
Diversification Opportunities for Caixabank and Home Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caixabank and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Home Capital Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Capital Rentals 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 Home Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Capital Rentals has no effect on the direction of Caixabank i.e., Caixabank and Home Capital go up and down completely randomly.
Pair Corralation between Caixabank and Home Capital
Assuming the 90 days trading horizon Caixabank SA is expected to generate 1.17 times more return on investment than Home Capital. However, Caixabank is 1.17 times more volatile than Home Capital Rentals. It trades about 0.01 of its potential returns per unit of risk. Home Capital Rentals is currently generating about -0.21 per unit of risk. If you would invest 522.00 in Caixabank SA on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Caixabank SA or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Caixabank SA vs. Home Capital Rentals
Performance |
| Timeline |
| Caixabank SA |
| Home Capital Rentals |
Caixabank and Home Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Home Capital
The main advantage of trading using opposite Caixabank and Home Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, Home Capital 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 Home Capital will offset losses from the drop in Home Capital's long position.The idea behind Caixabank SA and Home Capital Rentals 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.| Home Capital vs. Airbus Group SE | Home Capital vs. Industria de Diseno | Home Capital vs. Iberdrola SA | Home Capital vs. Petroleo Brasileiro SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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