Correlation Between Ayala Land and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both Ayala Land and BDO Unibank 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 Ayala Land and BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ayala Land and BDO Unibank, you can compare the effects of market volatilities on Ayala Land and BDO Unibank 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 Ayala Land with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayala Land and BDO Unibank.
Diversification Opportunities for Ayala Land and BDO Unibank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ayala and BDO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Land and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank and Ayala Land 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 Ayala Land are associated (or correlated) with BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank has no effect on the direction of Ayala Land i.e., Ayala Land and BDO Unibank go up and down completely randomly.
Pair Corralation between Ayala Land and BDO Unibank
Assuming the 90 days trading horizon Ayala Land is expected to generate 2.09 times less return on investment than BDO Unibank. But when comparing it to its historical volatility, Ayala Land is 1.02 times less risky than BDO Unibank. It trades about 0.03 of its potential returns per unit of risk. BDO Unibank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13,614 in BDO Unibank on September 1, 2024 and sell it today you would earn a total of 1,836 from holding BDO Unibank or generate 13.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ayala Land vs. BDO Unibank
Performance |
| Timeline |
| Ayala Land |
| BDO Unibank |
Ayala Land and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ayala Land and BDO Unibank
The main advantage of trading using opposite Ayala Land and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayala Land position performs unexpectedly, BDO Unibank 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 BDO Unibank will offset losses from the drop in BDO Unibank's long position.| Ayala Land vs. BDO Unibank | Ayala Land vs. Security Bank Corp | Ayala Land vs. Lepanto Consolidated Mining | Ayala Land vs. Philex Mining Corp |
| BDO Unibank vs. Sun Life Financial | BDO Unibank vs. Rizal Commercial Banking | BDO Unibank vs. Cebu Air Preferred | BDO Unibank vs. Manila Mining Corp |
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 the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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