Correlation Between Grupo Hotelero and Banco Bilbao
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero and Banco Bilbao 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 Grupo Hotelero and Banco Bilbao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and Banco Bilbao Vizcaya, you can compare the effects of market volatilities on Grupo Hotelero and Banco Bilbao 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 Grupo Hotelero with a short position of Banco Bilbao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Banco Bilbao.
Diversification Opportunities for Grupo Hotelero and Banco Bilbao
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and Banco is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Banco Bilbao Vizcaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Vizcaya and Grupo Hotelero 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 Grupo Hotelero Santa are associated (or correlated) with Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Vizcaya has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Banco Bilbao go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Banco Bilbao
Assuming the 90 days trading horizon Grupo Hotelero Santa is expected to under-perform the Banco Bilbao. In addition to that, Grupo Hotelero is 1.27 times more volatile than Banco Bilbao Vizcaya. It trades about -0.16 of its total potential returns per unit of risk. Banco Bilbao Vizcaya is currently generating about 0.02 per unit of volatility. If you would invest 19,898 in Banco Bilbao Vizcaya on September 19, 2024 and sell it today you would earn a total of 104.00 from holding Banco Bilbao Vizcaya or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Banco Bilbao Vizcaya
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Banco Bilbao Vizcaya |
Grupo Hotelero and Banco Bilbao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Banco Bilbao
The main advantage of trading using opposite Grupo Hotelero and Banco Bilbao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero position performs unexpectedly, Banco Bilbao 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 Banco Bilbao will offset losses from the drop in Banco Bilbao's long position.| Grupo Hotelero vs. Grupo Profuturo SAB | Grupo Hotelero vs. Promotora y Operadora | Grupo Hotelero vs. Promotora y Operadora | Grupo Hotelero vs. The Select Sector |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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