Correlation Between Bankinter and JAPAN POST

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

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

Diversification Opportunities for Bankinter and JAPAN POST

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Correlation Coefficient

Bankinter  JAPAN POST

Pay attention - limited upside

The 3 months correlation between Bankinter and JAPAN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter SA ADR and JAPAN POST BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN POST BANK and Bankinter 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 SA ADR are associated (or correlated) with JAPAN POST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN POST BANK has no effect on the direction of Bankinter i.e., Bankinter and JAPAN POST go up and down completely randomly.

Pair Corralation between Bankinter and JAPAN POST

Assuming the 90 days horizon Bankinter SA ADR is expected to generate 3.96 times more return on investment than JAPAN POST. However, Bankinter is 3.96 times more volatile than JAPAN POST BANK. It trades about 0.03 of its potential returns per unit of risk. JAPAN POST BANK is currently generating about 0.04 per unit of risk. If you would invest  653.00  in Bankinter SA ADR on August 31, 2024 and sell it today you would earn a total of  132.00  from holding Bankinter SA ADR or generate 20.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.39%
Values	Daily Returns

Bankinter SA ADR  vs.  JAPAN POST BANK

Bankinter SA ADR

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Bankinter SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

JAPAN POST BANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JAPAN POST BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, JAPAN POST is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bankinter and JAPAN POST

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

The idea behind Bankinter SA ADR and JAPAN POST BANK 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.