Correlation Between Bank Rakyat and Isabella Bank
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Isabella 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 Bank Rakyat and Isabella Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Isabella Bank, you can compare the effects of market volatilities on Bank Rakyat and Isabella 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 Bank Rakyat with a short position of Isabella Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Isabella Bank.
Diversification Opportunities for Bank Rakyat and Isabella Bank
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Isabella is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Isabella Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isabella Bank 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 Isabella Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isabella Bank has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Isabella Bank go up and down completely randomly.
Pair Corralation between Bank Rakyat and Isabella Bank
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Isabella Bank. In addition to that, Bank Rakyat is 1.8 times more volatile than Isabella Bank. It trades about -0.28 of its total potential returns per unit of risk. Isabella Bank is currently generating about -0.24 per unit of volatility. If you would invest 2,580 in Isabella Bank on November 28, 2024 and sell it today you would lose (153.00) from holding Isabella Bank or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Isabella Bank
Performance |
| Timeline |
| Bank Rakyat |
| Isabella Bank |
Bank Rakyat and Isabella Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Isabella Bank
The main advantage of trading using opposite Bank Rakyat and Isabella Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Isabella 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 Isabella Bank will offset losses from the drop in Isabella Bank's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
| Isabella Bank vs. Home Federal Bancorp | Isabella Bank vs. Magyar Bancorp | Isabella Bank vs. ChoiceOne Financial Services | Isabella Bank vs. Heritage Commerce 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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