Correlation Between Riverview Bancorp and Caixabank

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

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

Diversification Opportunities for Riverview Bancorp and Caixabank

-0.82

Correlation Coefficient

Riverview Bancorp  Caixabank

Pay attention - limited upside

The 3 months correlation between Riverview and Caixabank is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Riverview 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 Riverview 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 Riverview 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 Riverview Bancorp i.e., Riverview Bancorp and Caixabank go up and down completely randomly.

Pair Corralation between Riverview Bancorp and Caixabank

Given the investment horizon of 90 days Riverview Bancorp is expected to under-perform the Caixabank. But the stock apears to be less risky and, when comparing its historical volatility, Riverview Bancorp is 2.38 times less risky than Caixabank. The stock trades about -0.1 of its potential returns per unit of risk. The Caixabank SA ADR is currently generating about 0.29 of returns per unit of risk over similar time horizon. 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

Riverview Bancorp  vs.  Caixabank SA ADR

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.

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.

Pair Trading with Riverview Bancorp and Caixabank

The main advantage of trading using opposite Riverview Bancorp and Caixabank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riverview 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 Riverview 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.