Correlation Between CAIXABANK UNADR and POSBO UNSPADRS20YC1
Can any of the company-specific risk be diversified away by investing in both CAIXABANK UNADR and POSBO UNSPADRS20YC1 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 UNADR and POSBO UNSPADRS20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIXABANK UNADR 13 and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on CAIXABANK UNADR and POSBO UNSPADRS20YC1 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 UNADR with a short position of POSBO UNSPADRS20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIXABANK UNADR and POSBO UNSPADRS20YC1.
Diversification Opportunities for CAIXABANK UNADR and POSBO UNSPADRS20YC1
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CAIXABANK and POSBO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CAIXABANK UNADR 13 and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS20YC1 and CAIXABANK UNADR 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 UNADR 13 are associated (or correlated) with POSBO UNSPADRS20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS20YC1 has no effect on the direction of CAIXABANK UNADR i.e., CAIXABANK UNADR and POSBO UNSPADRS20YC1 go up and down completely randomly.
Pair Corralation between CAIXABANK UNADR and POSBO UNSPADRS20YC1
Assuming the 90 days trading horizon CAIXABANK UNADR 13 is expected to generate 0.74 times more return on investment than POSBO UNSPADRS20YC1. However, CAIXABANK UNADR 13 is 1.36 times less risky than POSBO UNSPADRS20YC1. It trades about 0.12 of its potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.06 per unit of risk. If you would invest 153.00 in CAIXABANK UNADR 13 on October 31, 2024 and sell it today you would earn a total of 26.00 from holding CAIXABANK UNADR 13 or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAIXABANK UNADR 13 vs. POSBO UNSPADRS20YC1
Performance |
| Timeline |
| CAIXABANK UNADR 13 |
| POSBO UNSPADRS20YC1 |
CAIXABANK UNADR and POSBO UNSPADRS20YC1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIXABANK UNADR and POSBO UNSPADRS20YC1
The main advantage of trading using opposite CAIXABANK UNADR and POSBO UNSPADRS20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIXABANK UNADR position performs unexpectedly, POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1 will offset losses from the drop in POSBO UNSPADRS20YC1's long position.| CAIXABANK UNADR vs. VELA TECHNOLPLC LS 0001 | CAIXABANK UNADR vs. Allegheny Technologies Incorporated | CAIXABANK UNADR vs. AAC TECHNOLOGHLDGADR | CAIXABANK UNADR vs. Addtech AB |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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