Correlation Between BDO Unibank and Ayala Land
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and Ayala Land 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 BDO Unibank and Ayala Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and Ayala Land, you can compare the effects of market volatilities on BDO Unibank and Ayala Land 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 BDO Unibank with a short position of Ayala Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Ayala Land.
Diversification Opportunities for BDO Unibank and Ayala Land
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BDO and Ayala is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Ayala Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Land and BDO Unibank 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 BDO Unibank are associated (or correlated) with Ayala Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Land has no effect on the direction of BDO Unibank i.e., BDO Unibank and Ayala Land go up and down completely randomly.
Pair Corralation between BDO Unibank and Ayala Land
Assuming the 90 days trading horizon BDO Unibank is expected to generate 0.9 times more return on investment than Ayala Land. However, BDO Unibank is 1.11 times less risky than Ayala Land. It trades about 0.05 of its potential returns per unit of risk. Ayala Land is currently generating about 0.01 per unit of risk. If you would invest 10,288 in BDO Unibank on August 30, 2024 and sell it today you would earn a total of 5,022 from holding BDO Unibank or generate 48.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BDO Unibank vs. Ayala Land
Performance |
| Timeline |
| BDO Unibank |
| Ayala Land |
BDO Unibank and Ayala Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and Ayala Land
The main advantage of trading using opposite BDO Unibank and Ayala Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, Ayala Land 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 Ayala Land will offset losses from the drop in Ayala Land's long position.| BDO Unibank vs. Union Bank of | BDO Unibank vs. Asia United Bank | BDO Unibank vs. Bank of the | BDO Unibank vs. Philippine Savings Bank |
| Ayala Land vs. Atlas Consolidated Mining | Ayala Land vs. Apex Mining Co | Ayala Land vs. Transpacific Broadband Group | Ayala Land vs. Converge Information Communications |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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