Correlation Between Central Puerto and Banc Of

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Can any of the company-specific risk be diversified away by investing in both Central Puerto and Banc Of 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 Central Puerto and Banc Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto and Banc Of California, you can compare the effects of market volatilities on Central Puerto and Banc Of 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 Central Puerto with a short position of Banc Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Banc Of.

Diversification Opportunities for Central Puerto and Banc Of

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Central Puerto and Banc Of

If you would invest  1,668  in Banc Of California on September 1, 2022 and sell it today you would earn a total of  29.00  from holding Banc Of California or generate 1.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Central Puerto  vs.  Banc Of California

 Performance (%) 
       Timeline  
Central Puerto 
Central Performance
0 of 100
Over the last 90 days Central Puerto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Central Puerto is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Banc Of California 
Banc Of Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Banc Of California are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Banc Of is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Banc Of Price Channel

Central Puerto and Banc Of Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Central Puerto and Banc Of

The main advantage of trading using opposite Central Puerto and Banc Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Banc Of 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 Banc Of will offset losses from the drop in Banc Of's long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Central Puerto as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Central Puerto's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Central Puerto's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Central Puerto.
The idea behind Central Puerto and Banc Of California 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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Check out your portfolio center. 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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