Correlation Between CaixaBank and United States

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

By analyzing existing cross correlation between CaixaBank SA and United States Steel, you can compare the effects of market volatilities on CaixaBank and United States 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 CaixaBank with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of CaixaBank and United States.

Diversification Opportunities for CaixaBank and United States

0.3

Correlation Coefficient

CaixaBank  United States

Weak diversification

The 3 months correlation between CaixaBank and United is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CaixaBank SA and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and CaixaBank 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 CaixaBank SA are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of CaixaBank i.e., CaixaBank and United States go up and down completely randomly.

Pair Corralation between CaixaBank and United States

Assuming the 90 days trading horizon CaixaBank SA is expected to generate 0.8 times more return on investment than United States. However, CaixaBank SA is 1.25 times less risky than United States. It trades about 0.25 of its potential returns per unit of risk. United States Steel is currently generating about 0.17 per unit of risk. If you would invest  512.00  in CaixaBank SA on December 22, 2024 and sell it today you would earn a total of  209.00  from holding CaixaBank SA or generate 40.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

CaixaBank SA  vs.  United States Steel

CaixaBank SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CaixaBank SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, CaixaBank reported solid returns over the last few months and may actually be approaching a breakup point.

United States Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United States reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CaixaBank and United States

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

The idea behind CaixaBank SA and United States Steel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.