Correlation Between Banco Bilbao and Victory Sycamore

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

By analyzing existing cross correlation between Banco Bilbao Viscaya and Victory Sycamore Small, you can compare the effects of market volatilities on Banco Bilbao and Victory Sycamore 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 Bilbao with a short position of Victory Sycamore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Victory Sycamore.

Diversification Opportunities for Banco Bilbao and Victory Sycamore

0.57

Correlation Coefficient

Banco Bilbao  Victory Sycamore

Very weak diversification

The 3 months correlation between Banco and Victory is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and Victory Sycamore Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Sycamore Small and Banco Bilbao 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 Bilbao Viscaya are associated (or correlated) with Victory Sycamore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Sycamore Small has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Victory Sycamore go up and down completely randomly.

Pair Corralation between Banco Bilbao and Victory Sycamore

Given the investment horizon of 90 days Banco Bilbao Viscaya is expected to generate 1.59 times more return on investment than Victory Sycamore. However, Banco Bilbao is 1.59 times more volatile than Victory Sycamore Small. It trades about 0.0 of its potential returns per unit of risk. Victory Sycamore Small is currently generating about -0.08 per unit of risk. If you would invest  1,130  in Banco Bilbao Viscaya on January 26, 2024 and sell it today you would lose (3.00) from holding Banco Bilbao Viscaya or give up 0.27% of portfolio value over 90 days.

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

Banco Bilbao Viscaya  vs.  Victory Sycamore Small

Banco Bilbao Viscaya

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Bilbao Viscaya are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Banco Bilbao sustained solid returns over the last few months and may actually be approaching a breakup point.

Victory Sycamore Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Sycamore Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Victory Sycamore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Bilbao and Victory Sycamore

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

The idea behind Banco Bilbao Viscaya and Victory Sycamore Small 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.