Correlation Between BANKINTER ADR and BP Plc

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

By analyzing existing cross correlation between BANKINTER ADR 2007 and BP plc, you can compare the effects of market volatilities on BANKINTER ADR and BP Plc 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 BANKINTER ADR with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANKINTER ADR and BP Plc.

Diversification Opportunities for BANKINTER ADR and BP Plc

-0.06

Correlation Coefficient

BANKINTER ADR  BP Plc

Good diversification

The 3 months correlation between BANKINTER and BPE5 is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding BANKINTER ADR 2007 and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and BANKINTER ADR 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 BANKINTER ADR 2007 are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of BANKINTER ADR i.e., BANKINTER ADR and BP Plc go up and down completely randomly.

Pair Corralation between BANKINTER ADR and BP Plc

Assuming the 90 days horizon BANKINTER ADR 2007 is expected to under-perform the BP Plc. In addition to that, BANKINTER ADR is 1.07 times more volatile than BP plc. It trades about -0.05 of its total potential returns per unit of risk. BP plc is currently generating about -0.05 per unit of volatility. If you would invest  491.00  in BP plc on September 3, 2024 and sell it today you would lose (28.00) from holding BP plc or give up 5.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BANKINTER ADR 2007  vs.  BP plc

BANKINTER ADR 2007

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANKINTER ADR 2007 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BANKINTER ADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BP plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BANKINTER ADR and BP Plc

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

The idea behind BANKINTER ADR 2007 and BP plc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.