Correlation Between AMS Small and Banco Bilbao

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

By analyzing existing cross correlation between AMS Small Cap and Banco Bilbao Vizcaya, you can compare the effects of market volatilities on AMS Small and Banco Bilbao 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 AMS Small with a short position of Banco Bilbao. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and Banco Bilbao.

Diversification Opportunities for AMS Small and Banco Bilbao

0.0

Correlation Coefficient

AMS Small  Banco Bilbao

Pay attention - limited upside

The 3 months correlation between AMS and Banco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and Banco Bilbao Vizcaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Vizcaya and AMS Small 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 AMS Small Cap are associated (or correlated) with Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Vizcaya has no effect on the direction of AMS Small i.e., AMS Small and Banco Bilbao go up and down completely randomly.

Pair Corralation between AMS Small and Banco Bilbao

If you would invest  126,209  in AMS Small Cap on December 27, 2024 and sell it today you would earn a total of  14,178  from holding AMS Small Cap or generate 11.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

AMS Small Cap  vs.  Banco Bilbao Vizcaya

Pair Trading with AMS Small and Banco Bilbao

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

The idea behind AMS Small Cap and Banco Bilbao Vizcaya 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.