Correlation Between Banco Bilbao and Cox ABG

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

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

Diversification Opportunities for Banco Bilbao and Cox ABG

-0.24

Correlation Coefficient

Banco Bilbao  Cox ABG

Very good diversification

The 3 months correlation between Banco and Cox is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Vizcaya and Cox ABG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cox ABG Group and Banco Bilbao 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 Banco Bilbao Vizcaya are associated (or correlated) with Cox ABG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cox ABG Group has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Cox ABG go up and down completely randomly.

Pair Corralation between Banco Bilbao and Cox ABG

Assuming the 90 days trading horizon Banco Bilbao Vizcaya is expected to generate 0.8 times more return on investment than Cox ABG. However, Banco Bilbao Vizcaya is 1.26 times less risky than Cox ABG. It trades about 0.13 of its potential returns per unit of risk. Cox ABG Group is currently generating about 0.01 per unit of risk. If you would invest  916.00  in Banco Bilbao Vizcaya on October 23, 2024 and sell it today you would earn a total of  128.00  from holding Banco Bilbao Vizcaya or generate 13.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.58%
Values	Daily Returns

Banco Bilbao Vizcaya  vs.  Cox ABG Group

Banco Bilbao Vizcaya

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Bilbao Vizcaya are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Banco Bilbao exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cox ABG Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Banco Bilbao and Cox ABG

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

The idea behind Banco Bilbao Vizcaya and Cox ABG Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.