Correlation Between Caixabank and Cox ABG

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

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

Diversification Opportunities for Caixabank and Cox ABG

-0.62

Correlation Coefficient

Caixabank  Cox ABG

Excellent diversification

The 3 months correlation between Caixabank and Cox is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Cox ABG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cox ABG Group 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 Cox ABG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cox ABG Group has no effect on the direction of Caixabank i.e., Caixabank and Cox ABG go up and down completely randomly.

Pair Corralation between Caixabank and Cox ABG

Assuming the 90 days trading horizon Caixabank SA is expected to generate 1.04 times more return on investment than Cox ABG. However, Caixabank is 1.04 times more volatile than Cox ABG Group. It trades about 0.35 of its potential returns per unit of risk. Cox ABG Group is currently generating about -0.07 per unit of risk. If you would invest  512.00  in Caixabank SA on December 23, 2024 and sell it today you would earn a total of  222.00  from holding Caixabank SA or generate 43.36% return on investment over 90 days.

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

Caixabank SA  vs.  Cox ABG Group

Caixabank SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Caixabank SA are ranked lower than 27 (%) 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.

Cox ABG Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cox ABG Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Caixabank and Cox ABG

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

The idea behind Caixabank SA and Cox ABG Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.