Correlation Between Red Cat and Bankinter
Can any of the company-specific risk be diversified away by investing in both Red Cat and Bankinter 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 Red Cat and Bankinter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Bankinter SA ADR, you can compare the effects of market volatilities on Red Cat and Bankinter 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 Red Cat with a short position of Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Bankinter.
Diversification Opportunities for Red Cat and Bankinter
Excellent diversification
The 3 months correlation between Red and Bankinter is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR and Red Cat 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 Red Cat Holdings are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of Red Cat i.e., Red Cat and Bankinter go up and down completely randomly.
Pair Corralation between Red Cat and Bankinter
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 1.42 times more return on investment than Bankinter. However, Red Cat is 1.42 times more volatile than Bankinter SA ADR. It trades about 0.1 of its potential returns per unit of risk. Bankinter SA ADR is currently generating about 0.03 per unit of risk. If you would invest 116.00 in Red Cat Holdings on August 30, 2024 and sell it today you would earn a total of 811.00 from holding Red Cat Holdings or generate 699.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.56% |
| Values | Daily Returns |
Red Cat Holdings vs. Bankinter SA ADR
Performance |
| Timeline |
| Red Cat Holdings |
| Bankinter SA ADR |
Red Cat and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Bankinter
The main advantage of trading using opposite Red Cat and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Bankinter vs. Bank Hapoalim ADR | Bankinter vs. Bank of East | Bankinter vs. BOC Hong Kong | Bankinter vs. Commercial International Bank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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