Correlation Between CMUV Bancorp and Caixabank

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

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

Diversification Opportunities for CMUV Bancorp and Caixabank

-0.71

Correlation Coefficient

CMUV Bancorp  Caixabank

Pay attention - limited upside

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

Pair Corralation between CMUV Bancorp and Caixabank

Given the investment horizon of 90 days CMUV Bancorp is expected to under-perform the Caixabank. But the otc stock apears to be less risky and, when comparing its historical volatility, CMUV Bancorp is 3.16 times less risky than Caixabank. The otc stock trades about -0.17 of its potential returns per unit of risk. The Caixabank SA ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

CMUV Bancorp  vs.  Caixabank SA ADR

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.

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.

Pair Trading with CMUV Bancorp and Caixabank

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

The idea behind CMUV Bancorp and Caixabank SA ADR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.