Correlation Between Caixabank and Hispanotels Inversiones

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

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

Diversification Opportunities for Caixabank and Hispanotels Inversiones

0.06

Correlation Coefficient

Caixabank  Hispanotels Inversiones

Significant diversification

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

Pair Corralation between Caixabank and Hispanotels Inversiones

Assuming the 90 days trading horizon Caixabank SA is expected to under-perform the Hispanotels Inversiones. In addition to that, Caixabank is 1.06 times more volatile than Hispanotels Inversiones SOCIMI. It trades about -0.01 of its total potential returns per unit of risk. Hispanotels Inversiones SOCIMI is currently generating about 0.19 per unit of volatility. If you would invest  581.00  in Hispanotels Inversiones SOCIMI on September 14, 2024 and sell it today you would earn a total of  129.00  from holding Hispanotels Inversiones SOCIMI or generate 22.2% return on investment over 90 days.

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

Caixabank SA  vs.  Hispanotels Inversiones SOCIMI

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. In spite of rather sound fundamental indicators, Caixabank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hispanotels Inversiones

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hispanotels Inversiones SOCIMI are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Hispanotels Inversiones exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caixabank and Hispanotels Inversiones

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

The idea behind Caixabank SA and Hispanotels Inversiones SOCIMI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.