Correlation Between BDO Unibank and Philippine National
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and Philippine National 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 Philippine National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and Philippine National Bank, you can compare the effects of market volatilities on BDO Unibank and Philippine National 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 Philippine National. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Philippine National.
Diversification Opportunities for BDO Unibank and Philippine National
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BDO and Philippine is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Philippine National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine National Bank 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 Philippine National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine National Bank has no effect on the direction of BDO Unibank i.e., BDO Unibank and Philippine National go up and down completely randomly.
Pair Corralation between BDO Unibank and Philippine National
Assuming the 90 days trading horizon BDO Unibank is expected to under-perform the Philippine National. In addition to that, BDO Unibank is 1.51 times more volatile than Philippine National Bank. It trades about -0.07 of its total potential returns per unit of risk. Philippine National Bank is currently generating about -0.01 per unit of volatility. If you would invest 2,705 in Philippine National Bank on August 29, 2024 and sell it today you would lose (15.00) from holding Philippine National Bank or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BDO Unibank vs. Philippine National Bank
Performance |
| Timeline |
| BDO Unibank |
| Philippine National Bank |
BDO Unibank and Philippine National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and Philippine National
The main advantage of trading using opposite BDO Unibank and Philippine National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, Philippine National 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 Philippine National will offset losses from the drop in Philippine National's long position.| BDO Unibank vs. Lepanto Consolidated Mining | BDO Unibank vs. Apex Mining Co | BDO Unibank vs. Sun Life Financial | BDO Unibank vs. Asia United Bank |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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