Correlation Between Home Capital and Caixabank
Can any of the company-specific risk be diversified away by investing in both Home Capital 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 Home Capital and Caixabank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and Caixabank SA, you can compare the effects of market volatilities on Home Capital 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 Home Capital with a short position of Caixabank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Caixabank.
Diversification Opportunities for Home Capital and Caixabank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Caixabank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Caixabank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank SA and Home Capital 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 Home Capital Rentals 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 Home Capital i.e., Home Capital and Caixabank go up and down completely randomly.
Pair Corralation between Home Capital and Caixabank
Assuming the 90 days trading horizon Home Capital Rentals is expected to under-perform the Caixabank. But the stock apears to be less risky and, when comparing its historical volatility, Home Capital Rentals is 1.22 times less risky than Caixabank. The stock trades about -0.21 of its potential returns per unit of risk. The Caixabank SA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Caixabank SA on August 29, 2024 and sell it today you would lose (28.00) from holding Caixabank SA or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Capital Rentals vs. Caixabank SA
Performance |
| Timeline |
| Home Capital Rentals |
| Caixabank SA |
Home Capital and Caixabank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Capital and Caixabank
The main advantage of trading using opposite Home Capital and Caixabank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital 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.| Home Capital vs. Inhome Prime Properties | Home Capital vs. Borges Agricultural Industrial | Home Capital vs. Squirrel Media SA | Home Capital vs. Cellnex Telecom 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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