Correlation Between Bankinter and Indra A

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

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

Diversification Opportunities for Bankinter and Indra A

0.07

Correlation Coefficient

Bankinter  Indra A

Significant diversification

The 3 months correlation between Bankinter and Indra is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter and Indra A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indra A 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 are associated (or correlated) with Indra A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indra A has no effect on the direction of Bankinter i.e., Bankinter and Indra A go up and down completely randomly.

Pair Corralation between Bankinter and Indra A

Assuming the 90 days trading horizon Bankinter is expected to under-perform the Indra A. In addition to that, Bankinter is 1.17 times more volatile than Indra A. It trades about -0.01 of its total potential returns per unit of risk. Indra A is currently generating about 0.05 per unit of volatility. If you would invest  1,659  in Indra A on September 15, 2024 and sell it today you would earn a total of  63.00  from holding Indra A or generate 3.8% return on investment over 90 days.

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

Bankinter  vs.  Indra A

Bankinter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bankinter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bankinter is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Indra A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Indra A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Indra A is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bankinter and Indra A

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

The idea behind Bankinter and Indra A 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.