Correlation Between BANKINTER ADR and IMPERIAL TOBACCO

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Can any of the company-specific risk be diversified away by investing in both BANKINTER ADR and IMPERIAL TOBACCO 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 BANKINTER ADR and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANKINTER ADR 2007 and IMPERIAL TOBACCO , you can compare the effects of market volatilities on BANKINTER ADR and IMPERIAL TOBACCO 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 BANKINTER ADR with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANKINTER ADR and IMPERIAL TOBACCO.

Diversification Opportunities for BANKINTER ADR and IMPERIAL TOBACCO

BANKINTERIMPERIALDiversified AwayBANKINTERIMPERIALDiversified Away100%
0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between BANKINTER and IMPERIAL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BANKINTER ADR 2007 and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and BANKINTER ADR 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 BANKINTER ADR 2007 are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of BANKINTER ADR i.e., BANKINTER ADR and IMPERIAL TOBACCO go up and down completely randomly.

Pair Corralation between BANKINTER ADR and IMPERIAL TOBACCO

Assuming the 90 days horizon BANKINTER ADR 2007 is expected to generate 2.1 times more return on investment than IMPERIAL TOBACCO. However, BANKINTER ADR is 2.1 times more volatile than IMPERIAL TOBACCO . It trades about 0.15 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.29 per unit of risk. If you would invest  722.00  in BANKINTER ADR 2007 on November 19, 2024 and sell it today you would earn a total of  123.00  from holding BANKINTER ADR 2007 or generate 17.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BANKINTER ADR 2007  vs.  IMPERIAL TOBACCO

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.15BAK ITB
       Timeline  
BANKINTER ADR 2007 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BANKINTER ADR 2007 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BANKINTER ADR reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb77.588.5
IMPERIAL TOBACCO 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in IMPERIAL TOBACCO are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, IMPERIAL TOBACCO unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb293031323334

BANKINTER ADR and IMPERIAL TOBACCO Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.62-4.21-2.8-1.390.02351.483.014.546.087.61 0.10.20.30.4
JavaScript chart by amCharts 3.21.15BAK ITB
       Returns  

Pair Trading with BANKINTER ADR and IMPERIAL TOBACCO

The main advantage of trading using opposite BANKINTER ADR and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANKINTER ADR position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.
The idea behind BANKINTER ADR 2007 and IMPERIAL TOBACCO 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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