Correlation Between BDO Unibank and Union Bank
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and Union Bank 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 Union Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and Union Bank of, you can compare the effects of market volatilities on BDO Unibank and Union Bank 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 Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Union Bank.
Diversification Opportunities for BDO Unibank and Union Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BDO and Union is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union 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 Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of BDO Unibank i.e., BDO Unibank and Union Bank go up and down completely randomly.
Pair Corralation between BDO Unibank and Union Bank
Assuming the 90 days trading horizon BDO Unibank is expected to generate 1.3 times more return on investment than Union Bank. However, BDO Unibank is 1.3 times more volatile than Union Bank of. It trades about -0.03 of its potential returns per unit of risk. Union Bank of is currently generating about -0.13 per unit of risk. If you would invest 14,450 in BDO Unibank on November 2, 2024 and sell it today you would lose (300.00) from holding BDO Unibank or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BDO Unibank vs. Union Bank of
Performance |
| Timeline |
| BDO Unibank |
| Union Bank |
BDO Unibank and Union Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and Union Bank
The main advantage of trading using opposite BDO Unibank and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, Union Bank 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 Union Bank will offset losses from the drop in Union Bank's long position.| BDO Unibank vs. Philippine Business Bank | BDO Unibank vs. Asia United Bank | BDO Unibank vs. SM Investments Corp | BDO Unibank vs. Philex Mining Corp |
| Union Bank vs. Metro Retail Stores | Union Bank vs. SM Investments Corp | Union Bank vs. Top Frontier Investment | Union Bank vs. Cebu Air Preferred |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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