Correlation Between Caixabank and Borges Agricultural

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

By analyzing existing cross correlation between Caixabank SA and Borges Agricultural Industrial, you can compare the effects of market volatilities on Caixabank and Borges Agricultural 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 Borges Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Borges Agricultural.

Diversification Opportunities for Caixabank and Borges Agricultural

0.82

Correlation Coefficient

Caixabank  Borges Agricultural

Very poor diversification

The 3 months correlation between Caixabank and Borges is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Borges Agricultural Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borges Agricultural 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 Borges Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borges Agricultural has no effect on the direction of Caixabank i.e., Caixabank and Borges Agricultural go up and down completely randomly.

Pair Corralation between Caixabank and Borges Agricultural

Assuming the 90 days trading horizon Caixabank SA is expected to generate 0.79 times more return on investment than Borges Agricultural. However, Caixabank SA is 1.26 times less risky than Borges Agricultural. It trades about 0.31 of its potential returns per unit of risk. Borges Agricultural Industrial is currently generating about 0.13 per unit of risk. If you would invest  521.00  in Caixabank SA on December 29, 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	Strong
Accuracy	100.0%
Values	Daily Returns

Caixabank SA  vs.  Borges Agricultural Industrial

Caixabank SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caixabank SA are ranked lower than 24 (%) 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.

Borges Agricultural

Risk-Adjusted Performance

OK

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

Pair Trading with Caixabank and Borges Agricultural

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

The idea behind Caixabank SA and Borges Agricultural Industrial 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.