Correlation Between Borges Agricultural and Caixabank

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

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

Diversification Opportunities for Borges Agricultural and Caixabank

-0.04

Correlation Coefficient

Borges Agricultural  Caixabank

Good diversification

The 3 months correlation between Borges and Caixabank is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Borges Agricultural Industrial and Caixabank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank SA and Borges Agricultural 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 Borges Agricultural Industrial 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 Borges Agricultural i.e., Borges Agricultural and Caixabank go up and down completely randomly.

Pair Corralation between Borges Agricultural and Caixabank

Assuming the 90 days trading horizon Borges Agricultural Industrial is expected to generate 1.27 times more return on investment than Caixabank. However, Borges Agricultural is 1.27 times more volatile than Caixabank SA. It trades about 0.06 of its potential returns per unit of risk. Caixabank SA is currently generating about -0.02 per unit of risk. If you would invest  270.00  in Borges Agricultural Industrial on September 13, 2024 and sell it today you would earn a total of  22.00  from holding Borges Agricultural Industrial or generate 8.15% return on investment over 90 days.

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

Borges Agricultural Industrial  vs.  Caixabank SA

Borges Agricultural

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Borges Agricultural Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Borges Agricultural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Caixabank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caixabank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Caixabank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Borges Agricultural and Caixabank

The main advantage of trading using opposite Borges Agricultural and Caixabank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borges Agricultural 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.

The idea behind Borges Agricultural Industrial and Caixabank SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.