Correlation Between CaixaBank and Crdit Agricole

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

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

Diversification Opportunities for CaixaBank and Crdit Agricole

0.2

Correlation Coefficient

CaixaBank  Crdit Agricole

Modest diversification

The 3 months correlation between CaixaBank and Crdit is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CaixaBank SA and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA 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 Crdit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of CaixaBank i.e., CaixaBank and Crdit Agricole go up and down completely randomly.

Pair Corralation between CaixaBank and Crdit Agricole

Assuming the 90 days trading horizon CaixaBank SA is expected to generate 1.24 times more return on investment than Crdit Agricole. However, CaixaBank is 1.24 times more volatile than Crdit Agricole SA. It trades about -0.04 of its potential returns per unit of risk. Crdit Agricole SA is currently generating about -0.05 per unit of risk. If you would invest  535.00  in CaixaBank SA on September 23, 2024 and sell it today you would lose (31.00) from holding CaixaBank SA or give up 5.79% of portfolio value over 90 days.

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

CaixaBank SA  vs.  Crdit Agricole SA

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.

Crdit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crdit Agricole 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 Crdit Agricole

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

The idea behind CaixaBank SA and Crdit Agricole SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.