Correlation Between Caixabank and CMUV Bancorp

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

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

Diversification Opportunities for Caixabank and CMUV Bancorp

-0.71

Correlation Coefficient

Caixabank  CMUV Bancorp

Pay attention - limited upside

The 3 months correlation between Caixabank and CMUV is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA ADR and CMUV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMUV Bancorp 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 ADR are associated (or correlated) with CMUV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMUV Bancorp has no effect on the direction of Caixabank i.e., Caixabank and CMUV Bancorp go up and down completely randomly.

Pair Corralation between Caixabank and CMUV Bancorp

Assuming the 90 days horizon Caixabank SA ADR is expected to generate 3.16 times more return on investment than CMUV Bancorp. However, Caixabank is 3.16 times more volatile than CMUV Bancorp. It trades about 0.01 of its potential returns per unit of risk. CMUV Bancorp is currently generating about -0.17 per unit of risk. If you would invest  185.00  in Caixabank SA ADR on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Caixabank SA ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Caixabank SA ADR  vs.  CMUV Bancorp

Caixabank SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caixabank SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Caixabank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CMUV Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CMUV Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CMUV Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Caixabank and CMUV Bancorp

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

The idea behind Caixabank SA ADR and CMUV Bancorp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.