Correlation Between Bank Rakyat and First Ottawa
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and First Ottawa 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 Bank Rakyat and First Ottawa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and First Ottawa Bancshares, you can compare the effects of market volatilities on Bank Rakyat and First Ottawa 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 Bank Rakyat with a short position of First Ottawa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and First Ottawa.
Diversification Opportunities for Bank Rakyat and First Ottawa
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and First is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and First Ottawa Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ottawa Bancshares and Bank Rakyat 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 Bank Rakyat are associated (or correlated) with First Ottawa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ottawa Bancshares has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and First Ottawa go up and down completely randomly.
Pair Corralation between Bank Rakyat and First Ottawa
Assuming the 90 days horizon Bank Rakyat is expected to generate 2.81 times less return on investment than First Ottawa. In addition to that, Bank Rakyat is 1.11 times more volatile than First Ottawa Bancshares. It trades about 0.01 of its total potential returns per unit of risk. First Ottawa Bancshares is currently generating about 0.02 per unit of volatility. If you would invest 11,100 in First Ottawa Bancshares on August 29, 2024 and sell it today you would earn a total of 901.00 from holding First Ottawa Bancshares or generate 8.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 70.77% |
| Values | Daily Returns |
Bank Rakyat vs. First Ottawa Bancshares
Performance |
| Timeline |
| Bank Rakyat |
| First Ottawa Bancshares |
Bank Rakyat and First Ottawa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and First Ottawa
The main advantage of trading using opposite Bank Rakyat and First Ottawa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, First Ottawa 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 First Ottawa will offset losses from the drop in First Ottawa's long position.| Bank Rakyat vs. Israel Discount Bank | Bank Rakyat vs. Baraboo Bancorporation | Bank Rakyat vs. Danske Bank AS | Bank Rakyat vs. Jyske Bank AS |
| First Ottawa vs. Century Next Financial | First Ottawa vs. Citizens Financial Corp | First Ottawa vs. Triad Business Bank | First Ottawa vs. First Bankers Trustshares |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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