Correlation Between Caixabank and ACS Actividades

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

By analyzing existing cross correlation between Caixabank SA and ACS Actividades de, you can compare the effects of market volatilities on Caixabank and ACS Actividades 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 Caixabank with a short position of ACS Actividades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and ACS Actividades.

Diversification Opportunities for Caixabank and ACS Actividades

0.94

Correlation Coefficient

Caixabank  ACS Actividades

Almost no diversification

The 3 months correlation between Caixabank and ACS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and ACS Actividades de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACS Actividades de and Caixabank 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 Caixabank SA are associated (or correlated) with ACS Actividades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACS Actividades de has no effect on the direction of Caixabank i.e., Caixabank and ACS Actividades go up and down completely randomly.

Pair Corralation between Caixabank and ACS Actividades

Assuming the 90 days trading horizon Caixabank SA is expected to generate 1.08 times more return on investment than ACS Actividades. However, Caixabank is 1.08 times more volatile than ACS Actividades de. It trades about 0.3 of its potential returns per unit of risk. ACS Actividades de is currently generating about 0.14 per unit of risk. If you would invest  521.00  in Caixabank SA on December 30, 2024 and sell it today you would earn a total of  205.00  from holding Caixabank SA or generate 39.35% return on investment over 90 days.

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

Caixabank SA  vs.  ACS Actividades de

Caixabank SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caixabank SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Caixabank exhibited solid returns over the last few months and may actually be approaching a breakup point.

ACS Actividades de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades de are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ACS Actividades exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caixabank and ACS Actividades

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

The idea behind Caixabank SA and ACS Actividades de 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .