Correlation Between BDO Unibank and Bank of the Philippine Is
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and Bank of the Philippine Is 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 Bank of the Philippine Is into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank ADR and Bank of the, you can compare the effects of market volatilities on BDO Unibank and Bank of the Philippine Is 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 Bank of the Philippine Is. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Bank of the Philippine Is.
Diversification Opportunities for BDO Unibank and Bank of the Philippine Is
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BDO and Bank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank ADR and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the Philippine Is 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 ADR are associated (or correlated) with Bank of the Philippine Is. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the Philippine Is has no effect on the direction of BDO Unibank i.e., BDO Unibank and Bank of the Philippine Is go up and down completely randomly.
Pair Corralation between BDO Unibank and Bank of the Philippine Is
Assuming the 90 days horizon BDO Unibank ADR is expected to generate 0.86 times more return on investment than Bank of the Philippine Is. However, BDO Unibank ADR is 1.16 times less risky than Bank of the Philippine Is. It trades about 0.3 of its potential returns per unit of risk. Bank of the is currently generating about 0.17 per unit of risk. If you would invest 2,334 in BDO Unibank ADR on December 10, 2024 and sell it today you would earn a total of 394.00 from holding BDO Unibank ADR or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BDO Unibank ADR vs. Bank of the
Performance |
| Timeline |
| BDO Unibank ADR |
| Bank of the Philippine Is |
BDO Unibank and Bank of the Philippine Is Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and Bank of the Philippine Is
The main advantage of trading using opposite BDO Unibank and Bank of the Philippine Is positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, Bank of the Philippine Is 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 Bank of the Philippine Is will offset losses from the drop in Bank of the Philippine Is' long position.| BDO Unibank vs. Swedbank AB | ||
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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