Correlation Between UBS Group and Banco Bilbao

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

By analyzing existing cross correlation between UBS Group AG and Banco Bilbao Vizcaya, you can compare the effects of market volatilities on UBS Group and Banco Bilbao 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 UBS Group with a short position of Banco Bilbao. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Banco Bilbao.

Diversification Opportunities for UBS Group and Banco Bilbao

-0.64

Correlation Coefficient

UBS Group  Banco Bilbao

Excellent diversification

The 3 months correlation between UBS and Banco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Banco Bilbao Vizcaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Vizcaya and UBS Group 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 UBS Group AG are associated (or correlated) with Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Vizcaya has no effect on the direction of UBS Group i.e., UBS Group and Banco Bilbao go up and down completely randomly.

Pair Corralation between UBS Group and Banco Bilbao

Considering the 90-day investment horizon UBS Group is expected to generate 4.63 times less return on investment than Banco Bilbao. But when comparing it to its historical volatility, UBS Group AG is 1.41 times less risky than Banco Bilbao. It trades about 0.07 of its potential returns per unit of risk. Banco Bilbao Vizcaya is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,016  in Banco Bilbao Vizcaya on December 27, 2024 and sell it today you would earn a total of  429.00  from holding Banco Bilbao Vizcaya or generate 42.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.33%
Values	Daily Returns

UBS Group AG  vs.  Banco Bilbao Vizcaya

UBS Group AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, UBS Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Banco Bilbao Vizcaya

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Bilbao Vizcaya are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Banco Bilbao reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UBS Group and Banco Bilbao

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

The idea behind UBS Group AG and Banco Bilbao Vizcaya 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.