Correlation Between CAIXABANK UNADR and POSBO UNSPADRS20YC1

Can any of the company-specific risk be diversified away by investing in both CAIXABANK UNADR and POSBO UNSPADRS20YC1 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 UNADR and POSBO UNSPADRS20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAIXABANK UNADR 13 and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on CAIXABANK UNADR and POSBO UNSPADRS20YC1 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 UNADR with a short position of POSBO UNSPADRS20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIXABANK UNADR and POSBO UNSPADRS20YC1.

Diversification Opportunities for CAIXABANK UNADR and POSBO UNSPADRS20YC1

-0.34

Correlation Coefficient

CAIXABANK UNADR  POSBO UNSPADRS20YC1

Very good diversification

The 3 months correlation between CAIXABANK and POSBO is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CAIXABANK UNADR 13 and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS20YC1 and CAIXABANK UNADR 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 UNADR 13 are associated (or correlated) with POSBO UNSPADRS20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS20YC1 has no effect on the direction of CAIXABANK UNADR i.e., CAIXABANK UNADR and POSBO UNSPADRS20YC1 go up and down completely randomly.

Pair Corralation between CAIXABANK UNADR and POSBO UNSPADRS20YC1

Assuming the 90 days trading horizon CAIXABANK UNADR 13 is expected to generate 0.99 times more return on investment than POSBO UNSPADRS20YC1. However, CAIXABANK UNADR 13 is 1.01 times less risky than POSBO UNSPADRS20YC1. It trades about 0.06 of its potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.04 per unit of risk. If you would invest  103.00  in CAIXABANK UNADR 13 on September 24, 2024 and sell it today you would earn a total of  52.00  from holding CAIXABANK UNADR 13 or generate 50.49% return on investment over 90 days.

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

CAIXABANK UNADR 13  vs.  POSBO UNSPADRS20YC1

CAIXABANK UNADR 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAIXABANK UNADR 13 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CAIXABANK UNADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

POSBO UNSPADRS20YC1

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, POSBO UNSPADRS20YC1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CAIXABANK UNADR and POSBO UNSPADRS20YC1

The main advantage of trading using opposite CAIXABANK UNADR and POSBO UNSPADRS20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIXABANK UNADR position performs unexpectedly, POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1 will offset losses from the drop in POSBO UNSPADRS20YC1's long position.

The idea behind CAIXABANK UNADR 13 and POSBO UNSPADRS20YC1 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.