Correlation Between BBVA Banco and Grupo Supervielle

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

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

Diversification Opportunities for BBVA Banco and Grupo Supervielle

0.99

Correlation Coefficient

BBVA Banco  Grupo Supervielle

No risk reduction

The 3 months correlation between BBVA and Grupo is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Grupo Supervielle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Supervielle and BBVA Banco 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 BBVA Banco Frances are associated (or correlated) with Grupo Supervielle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Supervielle has no effect on the direction of BBVA Banco i.e., BBVA Banco and Grupo Supervielle go up and down completely randomly.

Pair Corralation between BBVA Banco and Grupo Supervielle

Given the investment horizon of 90 days BBVA Banco is expected to generate 1.0 times less return on investment than Grupo Supervielle. But when comparing it to its historical volatility, BBVA Banco Frances is 1.11 times less risky than Grupo Supervielle. It trades about 0.1 of its potential returns per unit of risk. Grupo Supervielle SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Grupo Supervielle SA on February 17, 2024 and sell it today you would earn a total of  570.00  from holding Grupo Supervielle SA or generate 306.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

BBVA Banco Frances  vs.  Grupo Supervielle SA

BBVA Banco Frances

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BBVA Banco Frances are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BBVA Banco reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Supervielle

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Supervielle SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Grupo Supervielle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BBVA Banco and Grupo Supervielle

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

The idea behind BBVA Banco Frances and Grupo Supervielle 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.