Correlation Between CaixaBank and Eurobank Ergasias

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

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

Diversification Opportunities for CaixaBank and Eurobank Ergasias

0.38

Correlation Coefficient

CaixaBank  Eurobank Ergasias

Weak diversification

The 3 months correlation between CaixaBank and Eurobank is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CaixaBank SA and Eurobank Ergasias SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of CaixaBank i.e., CaixaBank and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between CaixaBank and Eurobank Ergasias

Assuming the 90 days horizon CaixaBank SA is expected to generate 1.02 times more return on investment than Eurobank Ergasias. However, CaixaBank is 1.02 times more volatile than Eurobank Ergasias SA. It trades about 0.15 of its potential returns per unit of risk. Eurobank Ergasias SA is currently generating about 0.12 per unit of risk. If you would invest  515.00  in CaixaBank SA on November 19, 2024 and sell it today you would earn a total of  108.00  from holding CaixaBank SA or generate 20.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

CaixaBank SA  vs.  Eurobank Ergasias SA

CaixaBank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CaixaBank SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CaixaBank reported solid returns over the last few months and may actually be approaching a breakup point.

Eurobank Ergasias

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Eurobank Ergasias showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CaixaBank and Eurobank Ergasias

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

The idea behind CaixaBank SA and Eurobank Ergasias SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.