Correlation Between Caixabank and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both Caixabank and Aozora Bank 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 Aozora Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA ADR and Aozora Bank, you can compare the effects of market volatilities on Caixabank and Aozora Bank 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 Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Aozora Bank.
Diversification Opportunities for Caixabank and Aozora Bank
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caixabank and Aozora is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA ADR and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank 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 ADR are associated (or correlated) with Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of Caixabank i.e., Caixabank and Aozora Bank go up and down completely randomly.
Pair Corralation between Caixabank and Aozora Bank
If you would invest 177.00 in Caixabank SA ADR on November 4, 2024 and sell it today you would earn a total of 23.00 from holding Caixabank SA ADR or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Caixabank SA ADR vs. Aozora Bank
Performance |
| Timeline |
| Caixabank SA ADR |
| Aozora Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caixabank and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Aozora Bank
The main advantage of trading using opposite Caixabank and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| Caixabank vs. Permanent TSB Group | Caixabank vs. Bank of Botetourt | Caixabank vs. Cashmere Valley Bank | Caixabank vs. Oak Valley Bancorp |
| Aozora Bank vs. Amkor Technology | Aozora Bank vs. Lindblad Expeditions Holdings | Aozora Bank vs. Norfolk Southern | Aozora Bank vs. Olympic Steel |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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