Correlation Between First Horizon and CaixaBank

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

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

Diversification Opportunities for First Horizon and CaixaBank

0.46

Correlation Coefficient

First Horizon  CaixaBank

Very weak diversification

The 3 months correlation between First and CaixaBank is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank SA and First Horizon 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 First Horizon are associated (or correlated) with CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of First Horizon i.e., First Horizon and CaixaBank go up and down completely randomly.

Pair Corralation between First Horizon and CaixaBank

Assuming the 90 days trading horizon First Horizon is expected to generate 0.09 times more return on investment than CaixaBank. However, First Horizon is 11.07 times less risky than CaixaBank. It trades about 0.18 of its potential returns per unit of risk. CaixaBank SA is currently generating about 0.0 per unit of risk. If you would invest  2,450  in First Horizon on August 31, 2024 and sell it today you would earn a total of  90.00  from holding First Horizon or generate 3.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

First Horizon  vs.  CaixaBank SA

First Horizon

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Horizon are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Horizon is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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. Despite nearly stable basic indicators, CaixaBank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Horizon and CaixaBank

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

The idea behind First Horizon and CaixaBank SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.