Correlation Between Caixabank and Riverview Bancorp

Can any of the company-specific risk be diversified away by investing in both Caixabank and Riverview 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 Riverview 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 Riverview Bancorp, you can compare the effects of market volatilities on Caixabank and Riverview 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 Riverview Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Riverview Bancorp.

Diversification Opportunities for Caixabank and Riverview Bancorp

-0.82

Correlation Coefficient

Caixabank  Riverview Bancorp

Pay attention - limited upside

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

Pair Corralation between Caixabank and Riverview Bancorp

Assuming the 90 days horizon Caixabank SA ADR is expected to generate 2.38 times more return on investment than Riverview Bancorp. However, Caixabank is 2.38 times more volatile than Riverview Bancorp. It trades about 0.29 of its potential returns per unit of risk. Riverview Bancorp is currently generating about -0.1 per unit of risk. If you would invest  175.00  in Caixabank SA ADR on December 22, 2024 and sell it today you would earn a total of  85.00  from holding Caixabank SA ADR or generate 48.57% return on investment over 90 days.

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

Caixabank SA ADR  vs.  Riverview Bancorp

Caixabank SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caixabank SA ADR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caixabank showed solid returns over the last few months and may actually be approaching a breakup point.

Riverview Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Riverview Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Riverview Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caixabank and Riverview Bancorp

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

The idea behind Caixabank SA ADR and Riverview 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.