Correlation Between BDO Unibank and RFM Corp
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and RFM Corp 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 RFM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and RFM Corp, you can compare the effects of market volatilities on BDO Unibank and RFM Corp 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 RFM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and RFM Corp.
Diversification Opportunities for BDO Unibank and RFM Corp
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BDO and RFM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and RFM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFM Corp 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 RFM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFM Corp has no effect on the direction of BDO Unibank i.e., BDO Unibank and RFM Corp go up and down completely randomly.
Pair Corralation between BDO Unibank and RFM Corp
Assuming the 90 days trading horizon BDO Unibank is expected to generate 5.47 times less return on investment than RFM Corp. But when comparing it to its historical volatility, BDO Unibank is 1.03 times less risky than RFM Corp. It trades about 0.02 of its potential returns per unit of risk. RFM Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 270.00 in RFM Corp on September 1, 2024 and sell it today you would earn a total of 120.00 from holding RFM Corp or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.45% |
| Values | Daily Returns |
BDO Unibank vs. RFM Corp
Performance |
| Timeline |
| BDO Unibank |
| RFM Corp |
BDO Unibank and RFM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and RFM Corp
The main advantage of trading using opposite BDO Unibank and RFM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, RFM Corp 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 RFM Corp will offset losses from the drop in RFM Corp's long position.| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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