Correlation Between Celulosa Argentina and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Celulosa Argentina and BBVA Banco 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 Celulosa Argentina and BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celulosa Argentina SA and BBVA Banco Frances, you can compare the effects of market volatilities on Celulosa Argentina and BBVA Banco 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 Celulosa Argentina with a short position of BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celulosa Argentina and BBVA Banco.
Diversification Opportunities for Celulosa Argentina and BBVA Banco
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Celulosa and BBVA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Celulosa Argentina SA and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances and Celulosa Argentina 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 Celulosa Argentina SA are associated (or correlated) with BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Celulosa Argentina i.e., Celulosa Argentina and BBVA Banco go up and down completely randomly.
Pair Corralation between Celulosa Argentina and BBVA Banco
Assuming the 90 days trading horizon Celulosa Argentina is expected to generate 2.57 times less return on investment than BBVA Banco. But when comparing it to its historical volatility, Celulosa Argentina SA is 1.12 times less risky than BBVA Banco. It trades about 0.13 of its potential returns per unit of risk. BBVA Banco Frances is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 536,000 in BBVA Banco Frances on September 5, 2024 and sell it today you would earn a total of 107,000 from holding BBVA Banco Frances or generate 19.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celulosa Argentina SA vs. BBVA Banco Frances
Performance |
| Timeline |
| Celulosa Argentina |
| BBVA Banco Frances |
Celulosa Argentina and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celulosa Argentina and BBVA Banco
The main advantage of trading using opposite Celulosa Argentina and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celulosa Argentina position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| Celulosa Argentina vs. Compania de Transporte | Celulosa Argentina vs. Harmony Gold Mining | Celulosa Argentina vs. Telecom Argentina | Celulosa Argentina vs. United States Steel |
| BBVA Banco vs. Harmony Gold Mining | BBVA Banco vs. Transportadora de Gas | BBVA Banco vs. Telecom Argentina | BBVA Banco vs. Compania de Transporte |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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