Correlation Between Bankinter and Energy Solar

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

By analyzing existing cross correlation between Bankinter and Energy Solar Tech, you can compare the effects of market volatilities on Bankinter and Energy Solar 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 with a short position of Energy Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankinter and Energy Solar.

Diversification Opportunities for Bankinter and Energy Solar

-0.06

Correlation Coefficient

Bankinter  Energy Solar

Good diversification

The 3 months correlation between Bankinter and Energy is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter and Energy Solar Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Solar Tech and Bankinter 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 are associated (or correlated) with Energy Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Solar Tech has no effect on the direction of Bankinter i.e., Bankinter and Energy Solar go up and down completely randomly.

Pair Corralation between Bankinter and Energy Solar

Assuming the 90 days trading horizon Bankinter is expected to under-perform the Energy Solar. But the stock apears to be less risky and, when comparing its historical volatility, Bankinter is 1.12 times less risky than Energy Solar. The stock trades about -0.01 of its potential returns per unit of risk. The Energy Solar Tech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  306.00  in Energy Solar Tech on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Energy Solar Tech or generate 0.0% return on investment over 90 days.

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

Bankinter  vs.  Energy Solar Tech

Bankinter

Risk-Adjusted Performance

0 of 100

Very Weak

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

Energy Solar Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bankinter and Energy Solar

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

The idea behind Bankinter and Energy Solar Tech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.