Correlation Between Caixabank and Arrienda Rental

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

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

Diversification Opportunities for Caixabank and Arrienda Rental

0.32

Correlation Coefficient

Caixabank  Arrienda Rental

Weak diversification

The 3 months correlation between Caixabank and Arrienda is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Arrienda Rental Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrienda Rental Prop 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 Arrienda Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrienda Rental Prop has no effect on the direction of Caixabank i.e., Caixabank and Arrienda Rental go up and down completely randomly.

Pair Corralation between Caixabank and Arrienda Rental

Assuming the 90 days trading horizon Caixabank is expected to generate 1.27 times less return on investment than Arrienda Rental. In addition to that, Caixabank is 21.34 times more volatile than Arrienda Rental Properties. It trades about 0.0 of its total potential returns per unit of risk. Arrienda Rental Properties is currently generating about 0.12 per unit of volatility. If you would invest  286.00  in Arrienda Rental Properties on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Arrienda Rental Properties or generate 0.7% return on investment over 90 days.

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

Caixabank SA  vs.  Arrienda Rental Properties

Caixabank SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Arrienda Rental Prop

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arrienda Rental Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Arrienda Rental is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Caixabank and Arrienda Rental

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

The idea behind Caixabank SA and Arrienda Rental Properties 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.