Correlation Between CaixaBank and JAPAN POST

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

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

Diversification Opportunities for CaixaBank and JAPAN POST

-0.41

Correlation Coefficient

CaixaBank  JAPAN POST

Very good diversification

The 3 months correlation between CaixaBank and JAPAN is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CaixaBank SA and JAPAN POST BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN POST BANK 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 JAPAN POST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN POST BANK has no effect on the direction of CaixaBank i.e., CaixaBank and JAPAN POST go up and down completely randomly.

Pair Corralation between CaixaBank and JAPAN POST

Assuming the 90 days horizon CaixaBank SA is expected to generate 0.06 times more return on investment than JAPAN POST. However, CaixaBank SA is 16.16 times less risky than JAPAN POST. It trades about 0.18 of its potential returns per unit of risk. JAPAN POST BANK is currently generating about -0.15 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 Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

CaixaBank SA  vs.  JAPAN POST BANK

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.

JAPAN POST BANK

Risk-Adjusted Performance

Very Weak

Over the last 90 days JAPAN POST BANK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CaixaBank and JAPAN POST

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

The idea behind CaixaBank SA and JAPAN POST BANK 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.