Correlation Between Banco Bilbao and UBS Group

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

By analyzing existing cross correlation between Banco Bilbao Viscaya and UBS Group AG, you can compare the effects of market volatilities on Banco Bilbao and UBS Group 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 UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and UBS Group.

Diversification Opportunities for Banco Bilbao and UBS Group

-0.14

Correlation Coefficient

Banco Bilbao  UBS Group

Good diversification

The 3 months correlation between Banco and UBS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 Viscaya are associated (or correlated) with UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and UBS Group go up and down completely randomly.

Pair Corralation between Banco Bilbao and UBS Group

Given the investment horizon of 90 days Banco Bilbao Viscaya is expected to under-perform the UBS Group. In addition to that, Banco Bilbao is 1.33 times more volatile than UBS Group AG. It trades about -0.01 of its total potential returns per unit of risk. UBS Group AG is currently generating about 0.1 per unit of volatility. If you would invest  2,944  in UBS Group AG on September 4, 2024 and sell it today you would earn a total of  284.00  from holding UBS Group AG or generate 9.65% return on investment over 90 days.

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

Banco Bilbao Viscaya  vs.  UBS Group AG

Banco Bilbao Viscaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bilbao Viscaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Banco Bilbao is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

UBS Group AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, UBS Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Banco Bilbao and UBS Group

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

The idea behind Banco Bilbao Viscaya and UBS Group AG 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.

Check out your portfolio center.

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.