Correlation Between Compagnie Plastic and BANKINTER ADR
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and BANKINTER ADR 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 Compagnie Plastic and BANKINTER ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and BANKINTER ADR 2007, you can compare the effects of market volatilities on Compagnie Plastic and BANKINTER ADR 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 Compagnie Plastic with a short position of BANKINTER ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and BANKINTER ADR.
Diversification Opportunities for Compagnie Plastic and BANKINTER ADR
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compagnie and BANKINTER is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and BANKINTER ADR 2007 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANKINTER ADR 2007 and Compagnie Plastic 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 Compagnie Plastic Omnium are associated (or correlated) with BANKINTER ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANKINTER ADR 2007 has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and BANKINTER ADR go up and down completely randomly.
Pair Corralation between Compagnie Plastic and BANKINTER ADR
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.55 times more return on investment than BANKINTER ADR. However, Compagnie Plastic is 1.55 times more volatile than BANKINTER ADR 2007. It trades about 0.11 of its potential returns per unit of risk. BANKINTER ADR 2007 is currently generating about 0.02 per unit of risk. If you would invest 807.00 in Compagnie Plastic Omnium on September 24, 2024 and sell it today you would earn a total of 165.00 from holding Compagnie Plastic Omnium or generate 20.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Compagnie Plastic Omnium vs. BANKINTER ADR 2007
Performance |
Timeline |
Compagnie Plastic Omnium |
BANKINTER ADR 2007 |
Compagnie Plastic and BANKINTER ADR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compagnie Plastic and BANKINTER ADR
The main advantage of trading using opposite Compagnie Plastic and BANKINTER ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, BANKINTER ADR 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 BANKINTER ADR will offset losses from the drop in BANKINTER ADR's long position.Compagnie Plastic vs. Dno ASA | Compagnie Plastic vs. DENSO P ADR | Compagnie Plastic vs. Aptiv PLC | Compagnie Plastic vs. PT Astra International |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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