Correlation Between BANKINTER ADR and Sandfire Resources

Can any of the company-specific risk be diversified away by investing in both BANKINTER ADR and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources Limited, you can compare the effects of market volatilities on BANKINTER ADR and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANKINTER ADR and Sandfire Resources.

Diversification Opportunities for BANKINTER ADR and Sandfire Resources

-0.42

Correlation Coefficient

BANKINTER ADR  Sandfire Resources

Very good diversification

The 3 months correlation between BANKINTER and Sandfire is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BANKINTER ADR 2007 and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of BANKINTER ADR i.e., BANKINTER ADR and Sandfire Resources go up and down completely randomly.

Pair Corralation between BANKINTER ADR and Sandfire Resources

Assuming the 90 days horizon BANKINTER ADR 2007 is expected to generate 0.76 times more return on investment than Sandfire Resources. However, BANKINTER ADR 2007 is 1.31 times less risky than Sandfire Resources. It trades about 0.11 of its potential returns per unit of risk. Sandfire Resources Limited is currently generating about -0.23 per unit of risk. If you would invest  694.00  in BANKINTER ADR 2007 on September 24, 2024 and sell it today you would earn a total of  26.00  from holding BANKINTER ADR 2007 or generate 3.75% return on investment over 90 days.

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

BANKINTER ADR 2007  vs.  Sandfire Resources Limited

BANKINTER ADR 2007

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BANKINTER ADR 2007 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BANKINTER ADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sandfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandfire Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BANKINTER ADR and Sandfire Resources

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

The idea behind BANKINTER ADR 2007 and Sandfire Resources Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.