Correlation Between Bankinvest USA and Sparinvest Europa

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

By analyzing existing cross correlation between Bankinvest USA and Sparinvest Europa Growth, you can compare the effects of market volatilities on Bankinvest USA and Sparinvest Europa 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 Bankinvest USA with a short position of Sparinvest Europa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankinvest USA and Sparinvest Europa.

Diversification Opportunities for Bankinvest USA and Sparinvest Europa

0.0

Correlation Coefficient

Bankinvest USA  Sparinvest Europa

Pay attention - limited upside

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

Pair Corralation between Bankinvest USA and Sparinvest Europa

If you would invest (100.00) in Bankinvest USA on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Bankinvest USA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bankinvest USA  vs.  Sparinvest Europa Growth

Bankinvest USA

Risk-Adjusted Performance

Very Weak

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

Sparinvest Europa Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparinvest Europa Growth has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Sparinvest Europa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bankinvest USA and Sparinvest Europa

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

The idea behind Bankinvest USA and Sparinvest Europa Growth 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.