Correlation Between Cap ISR and Caixabank Seleccin

Can any of the company-specific risk be diversified away by investing in both Cap ISR and Caixabank Seleccin 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 Cap ISR and Caixabank Seleccin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cap ISR Actions and Caixabank Seleccin Tendencias, you can compare the effects of market volatilities on Cap ISR and Caixabank Seleccin 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 Cap ISR with a short position of Caixabank Seleccin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cap ISR and Caixabank Seleccin.

Diversification Opportunities for Cap ISR and Caixabank Seleccin

-0.48

Correlation Coefficient

Cap ISR  Caixabank Seleccin

Very good diversification

The 3 months correlation between Cap and Caixabank is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cap ISR Actions and Caixabank Seleccin Tendencias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank Seleccin and Cap ISR 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 Cap ISR Actions are associated (or correlated) with Caixabank Seleccin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixabank Seleccin has no effect on the direction of Cap ISR i.e., Cap ISR and Caixabank Seleccin go up and down completely randomly.

Pair Corralation between Cap ISR and Caixabank Seleccin

Assuming the 90 days trading horizon Cap ISR Actions is expected to under-perform the Caixabank Seleccin. But the fund apears to be less risky and, when comparing its historical volatility, Cap ISR Actions is 1.19 times less risky than Caixabank Seleccin. The fund trades about -0.05 of its potential returns per unit of risk. The Caixabank Seleccin Tendencias is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,594  in Caixabank Seleccin Tendencias on October 4, 2024 and sell it today you would earn a total of  65.00  from holding Caixabank Seleccin Tendencias or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Cap ISR Actions  vs.  Caixabank Seleccin Tendencias

Cap ISR Actions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cap ISR Actions has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Cap ISR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Caixabank Seleccin

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Caixabank Seleccin Tendencias has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Caixabank Seleccin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cap ISR and Caixabank Seleccin

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

The idea behind Cap ISR Actions and Caixabank Seleccin Tendencias 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.