Correlation Between CaixaBank and First Horizon

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

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

Diversification Opportunities for CaixaBank and First Horizon

0.75

Correlation Coefficient

CaixaBank  First Horizon

Poor diversification

The 3 months correlation between CaixaBank and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CaixaBank SA and First Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Horizon 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 First Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Horizon has no effect on the direction of CaixaBank i.e., CaixaBank and First Horizon go up and down completely randomly.

Pair Corralation between CaixaBank and First Horizon

Assuming the 90 days horizon CaixaBank SA is expected to generate 18.48 times more return on investment than First Horizon. However, CaixaBank is 18.48 times more volatile than First Horizon. It trades about 0.18 of its potential returns per unit of risk. First Horizon is currently generating about 0.19 per unit of risk. If you would invest  546.00  in CaixaBank SA on December 30, 2024 and sell it today you would earn a total of  243.00  from holding CaixaBank SA or generate 44.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

CaixaBank SA  vs.  First Horizon

CaixaBank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CaixaBank SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CaixaBank reported solid returns over the last few months and may actually be approaching a breakup point.

First Horizon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Horizon are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Horizon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CaixaBank and First Horizon

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

The idea behind CaixaBank SA and First Horizon 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..