Correlation Between Banco De and Eastern Bankshares
Can any of the company-specific risk be diversified away by investing in both Banco De and Eastern Bankshares 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 Eastern Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco De Chile and Eastern Bankshares, you can compare the effects of market volatilities on Banco De and Eastern Bankshares 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 Eastern Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Eastern Bankshares.
Diversification Opportunities for Banco De and Eastern Bankshares
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Eastern is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Eastern Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Bankshares 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 Chile are associated (or correlated) with Eastern Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Bankshares has no effect on the direction of Banco De i.e., Banco De and Eastern Bankshares go up and down completely randomly.
Pair Corralation between Banco De and Eastern Bankshares
Considering the 90-day investment horizon Banco De is expected to generate 1.25 times less return on investment than Eastern Bankshares. But when comparing it to its historical volatility, Banco De Chile is 1.69 times less risky than Eastern Bankshares. It trades about 0.04 of its potential returns per unit of risk. Eastern Bankshares is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,501 in Eastern Bankshares on September 1, 2024 and sell it today you would earn a total of 363.00 from holding Eastern Bankshares or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco De Chile vs. Eastern Bankshares
Performance |
| Timeline |
| Banco De Chile |
| Eastern Bankshares |
Banco De and Eastern Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and Eastern Bankshares
The main advantage of trading using opposite Banco De and Eastern Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, Eastern Bankshares 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 Eastern Bankshares will offset losses from the drop in Eastern Bankshares' long position.| Banco De vs. Banco Santander Brasil | Banco De vs. CrossFirst Bankshares | Banco De vs. Banco Bradesco SA | Banco De vs. CF Bankshares |
| Eastern Bankshares vs. Western New England | Eastern Bankshares vs. Northeast Community Bancorp | Eastern Bankshares vs. Independent Bank | Eastern Bankshares vs. The First Bancshares, |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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