Correlation Between BBVA Telecomunicacion and Swedbank Robur

Can any of the company-specific risk be diversified away by investing in both BBVA Telecomunicacion and Swedbank Robur 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 BBVA Telecomunicacion and Swedbank Robur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BBVA Telecomunicaciones PP and Swedbank Robur Corporate, you can compare the effects of market volatilities on BBVA Telecomunicacion and Swedbank Robur 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 BBVA Telecomunicacion with a short position of Swedbank Robur. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Telecomunicacion and Swedbank Robur.

Diversification Opportunities for BBVA Telecomunicacion and Swedbank Robur

0.85

Correlation Coefficient

BBVA Telecomunicacion  Swedbank Robur

Very poor diversification

The 3 months correlation between BBVA and Swedbank is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Telecomunicaciones PP and Swedbank Robur Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank Robur Corporate and BBVA Telecomunicacion 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 BBVA Telecomunicaciones PP are associated (or correlated) with Swedbank Robur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank Robur Corporate has no effect on the direction of BBVA Telecomunicacion i.e., BBVA Telecomunicacion and Swedbank Robur go up and down completely randomly.

Pair Corralation between BBVA Telecomunicacion and Swedbank Robur

Assuming the 90 days trading horizon BBVA Telecomunicaciones PP is expected to generate 4.89 times more return on investment than Swedbank Robur. However, BBVA Telecomunicacion is 4.89 times more volatile than Swedbank Robur Corporate. It trades about 0.18 of its potential returns per unit of risk. Swedbank Robur Corporate is currently generating about 0.22 per unit of risk. If you would invest  2,926  in BBVA Telecomunicaciones PP on September 22, 2024 and sell it today you would earn a total of  94.00  from holding BBVA Telecomunicaciones PP or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BBVA Telecomunicaciones PP  vs.  Swedbank Robur Corporate

BBVA Telecomunicaciones

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BBVA Telecomunicaciones PP are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unsteady basic indicators, BBVA Telecomunicacion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Swedbank Robur Corporate

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank Robur Corporate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Swedbank Robur is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BBVA Telecomunicacion and Swedbank Robur

The main advantage of trading using opposite BBVA Telecomunicacion and Swedbank Robur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Telecomunicacion position performs unexpectedly, Swedbank Robur 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 Swedbank Robur will offset losses from the drop in Swedbank Robur's long position.

The idea behind BBVA Telecomunicaciones PP and Swedbank Robur Corporate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.