Correlation Between CAIXABANK UNADR and ROMERIKE SPAREBANK
Can any of the company-specific risk be diversified away by investing in both CAIXABANK UNADR and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK NK, you can compare the effects of market volatilities on CAIXABANK UNADR and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIXABANK UNADR and ROMERIKE SPAREBANK.
Diversification Opportunities for CAIXABANK UNADR and ROMERIKE SPAREBANK
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CAIXABANK and ROMERIKE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CAIXABANK UNADR 13 and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of CAIXABANK UNADR i.e., CAIXABANK UNADR and ROMERIKE SPAREBANK go up and down completely randomly.
Pair Corralation between CAIXABANK UNADR and ROMERIKE SPAREBANK
Assuming the 90 days trading horizon CAIXABANK UNADR is expected to generate 7.21 times less return on investment than ROMERIKE SPAREBANK. But when comparing it to its historical volatility, CAIXABANK UNADR 13 is 12.67 times less risky than ROMERIKE SPAREBANK. It trades about 0.07 of its potential returns per unit of risk. ROMERIKE SPAREBANK NK is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,116 in ROMERIKE SPAREBANK NK on September 4, 2024 and sell it today you would lose (46.00) from holding ROMERIKE SPAREBANK NK or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CAIXABANK UNADR 13 vs. ROMERIKE SPAREBANK NK
Performance |
| Timeline |
| CAIXABANK UNADR 13 |
| ROMERIKE SPAREBANK |
CAIXABANK UNADR and ROMERIKE SPAREBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIXABANK UNADR and ROMERIKE SPAREBANK
The main advantage of trading using opposite CAIXABANK UNADR and ROMERIKE SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIXABANK UNADR position performs unexpectedly, ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK will offset losses from the drop in ROMERIKE SPAREBANK's long position.| CAIXABANK UNADR vs. Wyndham Hotels Resorts | CAIXABANK UNADR vs. AXWAY SOFTWARE EO | CAIXABANK UNADR vs. Check Point Software | CAIXABANK UNADR vs. COVIVIO HOTELS INH |
| ROMERIKE SPAREBANK vs. Postal Savings Bank | ROMERIKE SPAREBANK vs. CAIXABANK UNADR 13 | ROMERIKE SPAREBANK vs. Superior Plus Corp | ROMERIKE SPAREBANK vs. NMI Holdings |
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