Correlation Between NYSE Composite and CaixaBank
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and CaixaBank 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 NYSE Composite and CaixaBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and CaixaBank SA, you can compare the effects of market volatilities on NYSE Composite and CaixaBank 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 NYSE Composite with a short position of CaixaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and CaixaBank.
Diversification Opportunities for NYSE Composite and CaixaBank
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and CaixaBank is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank SA and NYSE Composite 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 NYSE Composite are associated (or correlated) with CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of NYSE Composite i.e., NYSE Composite and CaixaBank go up and down completely randomly.
Pair Corralation between NYSE Composite and CaixaBank
Assuming the 90 days trading horizon NYSE Composite is expected to generate 10.08 times less return on investment than CaixaBank. But when comparing it to its historical volatility, NYSE Composite is 13.88 times less risky than CaixaBank. It trades about 0.08 of its potential returns per unit of risk. CaixaBank SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 375.00 in CaixaBank SA on August 30, 2024 and sell it today you would earn a total of 140.00 from holding CaixaBank SA or generate 37.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.31% |
| Values | Daily Returns |
NYSE Composite vs. CaixaBank SA
Performance |
| Timeline |
NYSE Composite and CaixaBank Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
CaixaBank SA
Pair trading matchups for CaixaBank
Pair Trading with NYSE Composite and CaixaBank
The main advantage of trading using opposite NYSE Composite and CaixaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, CaixaBank 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 CaixaBank will offset losses from the drop in CaixaBank's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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