Correlation Between Luckin Coffee and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee 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 Luckin Coffee and BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and BBVA Banco Frances, you can compare the effects of market volatilities on Luckin Coffee 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 Luckin Coffee with a short position of BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and BBVA Banco.
Diversification Opportunities for Luckin Coffee and BBVA Banco
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Luckin and BBVA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee 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 Luckin Coffee 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 Luckin Coffee 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 Luckin Coffee i.e., Luckin Coffee and BBVA Banco go up and down completely randomly.
Pair Corralation between Luckin Coffee and BBVA Banco
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 4.73 times less return on investment than BBVA Banco. But when comparing it to its historical volatility, Luckin Coffee is 2.18 times less risky than BBVA Banco. It trades about 0.11 of its potential returns per unit of risk. BBVA Banco Frances is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,660 in BBVA Banco Frances on October 15, 2024 and sell it today you would earn a total of 560.00 from holding BBVA Banco Frances or generate 33.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luckin Coffee vs. BBVA Banco Frances
Performance |
| Timeline |
| Luckin Coffee |
| BBVA Banco Frances |
Luckin Coffee and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and BBVA Banco
The main advantage of trading using opposite Luckin Coffee and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee 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.| Luckin Coffee vs. Xinhua Winshare Publishing | Luckin Coffee vs. Perdoceo Education | Luckin Coffee vs. Boyd Gaming | Luckin Coffee vs. GAMESTOP |
| BBVA Banco vs. Darden Restaurants | BBVA Banco vs. Sunstone Hotel Investors | BBVA Banco vs. COMPUTERSHARE | BBVA Banco vs. Luckin Coffee |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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