Correlation Between Banco Bilbao and ABN AMRO
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and ABN AMRO 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 ABN AMRO 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 ABN AMRO Bank, you can compare the effects of market volatilities on Banco Bilbao and ABN AMRO 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 ABN AMRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and ABN AMRO.
Diversification Opportunities for Banco Bilbao and ABN AMRO
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and ABN is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Vizcaya and ABN AMRO Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN AMRO Bank 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 ABN AMRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN AMRO Bank has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and ABN AMRO go up and down completely randomly.
Pair Corralation between Banco Bilbao and ABN AMRO
Assuming the 90 days horizon Banco Bilbao Vizcaya is expected to generate 1.4 times more return on investment than ABN AMRO. However, Banco Bilbao is 1.4 times more volatile than ABN AMRO Bank. It trades about 0.27 of its potential returns per unit of risk. ABN AMRO Bank is currently generating about 0.25 per unit of risk. If you would invest 1,016 in Banco Bilbao Vizcaya on December 2, 2024 and sell it today you would earn a total of 314.00 from holding Banco Bilbao Vizcaya or generate 30.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 90.0% |
Values | Daily Returns |
Banco Bilbao Vizcaya vs. ABN AMRO Bank
Performance |
Timeline |
Banco Bilbao Vizcaya |
ABN AMRO Bank |
Banco Bilbao and ABN AMRO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Bilbao and ABN AMRO
The main advantage of trading using opposite Banco Bilbao and ABN AMRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, ABN AMRO 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 ABN AMRO will offset losses from the drop in ABN AMRO's long position.Banco Bilbao vs. Bank of America | Banco Bilbao vs. Barclays PLC | Banco Bilbao vs. Bank of America | Banco Bilbao vs. ABN AMRO Bank |
ABN AMRO vs. Barclays PLC | ABN AMRO vs. Bank of America | ABN AMRO vs. Bank of America | ABN AMRO vs. Banco Bilbao Vizcaya |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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