Correlation Between Bankinter and Linea Directa

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

By analyzing existing cross correlation between Bankinter and Linea Directa Aseguradora, you can compare the effects of market volatilities on Bankinter and Linea Directa 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 Bankinter with a short position of Linea Directa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankinter and Linea Directa.

Diversification Opportunities for Bankinter and Linea Directa

0.73

Correlation Coefficient

Bankinter  Linea Directa

Poor diversification

The 3 months correlation between Bankinter and Linea is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter and Linea Directa Aseguradora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linea Directa Aseguradora and Bankinter 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 Bankinter are associated (or correlated) with Linea Directa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linea Directa Aseguradora has no effect on the direction of Bankinter i.e., Bankinter and Linea Directa go up and down completely randomly.

Pair Corralation between Bankinter and Linea Directa

Assuming the 90 days trading horizon Bankinter is expected to generate 0.8 times more return on investment than Linea Directa. However, Bankinter is 1.25 times less risky than Linea Directa. It trades about 0.21 of its potential returns per unit of risk. Linea Directa Aseguradora is currently generating about 0.16 per unit of risk. If you would invest  959.00  in Bankinter on April 20, 2025 and sell it today you would earn a total of  174.00  from holding Bankinter or generate 18.14% return on investment over 90 days.

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

Bankinter  vs.  Linea Directa Aseguradora

Bankinter

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bankinter are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bankinter exhibited solid returns over the last few months and may actually be approaching a breakup point.

Linea Directa Aseguradora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Linea Directa Aseguradora are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Linea Directa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bankinter and Linea Directa

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

The idea behind Bankinter and Linea Directa Aseguradora 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.