Correlation Between CaixaBank and Intesa Sanpaolo

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

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

Diversification Opportunities for CaixaBank and Intesa Sanpaolo

0.31

Correlation Coefficient

CaixaBank  Intesa Sanpaolo

Weak diversification

The 3 months correlation between CaixaBank and Intesa is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CaixaBank SA and Intesa Sanpaolo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intesa Sanpaolo SpA 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 Intesa Sanpaolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intesa Sanpaolo SpA has no effect on the direction of CaixaBank i.e., CaixaBank and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between CaixaBank and Intesa Sanpaolo

Assuming the 90 days trading horizon CaixaBank SA is expected to under-perform the Intesa Sanpaolo. In addition to that, CaixaBank is 1.31 times more volatile than Intesa Sanpaolo SpA. It trades about -0.04 of its total potential returns per unit of risk. Intesa Sanpaolo SpA is currently generating about 0.06 per unit of volatility. If you would invest  361.00  in Intesa Sanpaolo SpA on September 23, 2024 and sell it today you would earn a total of  19.00  from holding Intesa Sanpaolo SpA or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CaixaBank SA  vs.  Intesa Sanpaolo SpA

CaixaBank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CaixaBank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, CaixaBank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Intesa Sanpaolo SpA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intesa Sanpaolo SpA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intesa Sanpaolo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CaixaBank and Intesa Sanpaolo

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

The idea behind CaixaBank SA and Intesa Sanpaolo SpA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.