Correlation Between Tier1 Technology and Bankinter
Can any of the company-specific risk be diversified away by investing in both Tier1 Technology 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 Tier1 Technology and Bankinter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tier1 Technology SA and Bankinter, you can compare the effects of market volatilities on Tier1 Technology 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 Tier1 Technology with a short position of Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tier1 Technology and Bankinter.
Diversification Opportunities for Tier1 Technology and Bankinter
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tier1 and Bankinter is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tier1 Technology SA and Bankinter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter and Tier1 Technology 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 Tier1 Technology SA 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 has no effect on the direction of Tier1 Technology i.e., Tier1 Technology and Bankinter go up and down completely randomly.
Pair Corralation between Tier1 Technology and Bankinter
Assuming the 90 days trading horizon Tier1 Technology SA is expected to generate 1.71 times more return on investment than Bankinter. However, Tier1 Technology is 1.71 times more volatile than Bankinter. It trades about 0.19 of its potential returns per unit of risk. Bankinter is currently generating about 0.05 per unit of risk. If you would invest 262.00 in Tier1 Technology SA on August 24, 2024 and sell it today you would earn a total of 32.00 from holding Tier1 Technology SA or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tier1 Technology SA vs. Bankinter
Performance |
| Timeline |
| Tier1 Technology |
| Bankinter |
Tier1 Technology and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tier1 Technology and Bankinter
The main advantage of trading using opposite Tier1 Technology and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tier1 Technology 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.| Tier1 Technology vs. Amadeus IT Group | Tier1 Technology vs. Indra A | Tier1 Technology vs. Global Dominion Access | Tier1 Technology vs. Squirrel Media SA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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