Correlation Between Banco De and Bodegas Riojanas

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

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

Diversification Opportunities for Banco De and Bodegas Riojanas

0.0

Correlation Coefficient

Banco De  Bodegas Riojanas

Pay attention - limited upside

The 3 months correlation between Banco and Bodegas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Sabadell and Bodegas Riojanas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bodegas Riojanas and Banco De 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 Banco de Sabadell are associated (or correlated) with Bodegas Riojanas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bodegas Riojanas has no effect on the direction of Banco De i.e., Banco De and Bodegas Riojanas go up and down completely randomly.

Pair Corralation between Banco De and Bodegas Riojanas

If you would invest  116.00  in Banco de Sabadell on February 19, 2024 and sell it today you would earn a total of  73.00  from holding Banco de Sabadell or generate 62.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Banco de Sabadell  vs.  Bodegas Riojanas SA

Banco de Sabadell

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Sabadell are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Banco De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bodegas Riojanas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bodegas Riojanas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bodegas Riojanas is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Banco De and Bodegas Riojanas

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

The idea behind Banco de Sabadell and Bodegas Riojanas 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.