Correlation Between Caixabank and Commercial International

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

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

Diversification Opportunities for Caixabank and Commercial International

0.17

Correlation Coefficient

Caixabank  Commercial International

Average diversification

The 3 months correlation between Caixabank and Commercial is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA ADR and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International 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 ADR are associated (or correlated) with Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of Caixabank i.e., Caixabank and Commercial International go up and down completely randomly.

Pair Corralation between Caixabank and Commercial International

Assuming the 90 days horizon Caixabank SA ADR is expected to under-perform the Commercial International. In addition to that, Caixabank is 1.24 times more volatile than Commercial International Bank. It trades about -0.04 of its total potential returns per unit of risk. Commercial International Bank is currently generating about -0.04 per unit of volatility. If you would invest  160.00  in Commercial International Bank on September 2, 2024 and sell it today you would lose (8.00) from holding Commercial International Bank or give up 5.0% of portfolio value over 90 days.

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

Caixabank SA ADR  vs.  Commercial International Bank

Caixabank SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Caixabank and Commercial International

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

The idea behind Caixabank SA ADR and Commercial International 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.