Correlation Between Ford and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and BBVA Banco Frances, you can compare the effects of market volatilities on Ford 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 Ford with a short position of BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and BBVA Banco.
Diversification Opportunities for Ford and BBVA Banco
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and BBVA is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and BBVA Banco go up and down completely randomly.
Pair Corralation between Ford and BBVA Banco
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the BBVA Banco. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.14 times less risky than BBVA Banco. The stock trades about 0.0 of its potential returns per unit of risk. The BBVA Banco Frances is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 323.00 in BBVA Banco Frances on November 5, 2024 and sell it today you would earn a total of 1,797 from holding BBVA Banco Frances or generate 556.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Ford Motor vs. BBVA Banco Frances
Performance |
| Timeline |
| Ford Motor |
| BBVA Banco Frances |
Ford and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and BBVA Banco
The main advantage of trading using opposite Ford and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and BBVA Banco Frances 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.| BBVA Banco vs. ADRIATIC METALS LS 013355 | BBVA Banco vs. Coeur Mining | BBVA Banco vs. Perseus Mining Limited | BBVA Banco vs. Zijin Mining Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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