Correlation Between Bank of the and AgriNurture
Can any of the company-specific risk be diversified away by investing in both Bank of the and AgriNurture 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 of the and AgriNurture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of the and AgriNurture, you can compare the effects of market volatilities on Bank of the and AgriNurture 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 of the with a short position of AgriNurture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and AgriNurture.
Diversification Opportunities for Bank of the and AgriNurture
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and AgriNurture is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and AgriNurture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgriNurture and Bank of the 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 of the are associated (or correlated) with AgriNurture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgriNurture has no effect on the direction of Bank of the i.e., Bank of the and AgriNurture go up and down completely randomly.
Pair Corralation between Bank of the and AgriNurture
Assuming the 90 days trading horizon Bank of the is expected to under-perform the AgriNurture. But the stock apears to be less risky and, when comparing its historical volatility, Bank of the is 1.89 times less risky than AgriNurture. The stock trades about -0.28 of its potential returns per unit of risk. The AgriNurture is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 56.00 in AgriNurture on August 26, 2024 and sell it today you would lose (2.00) from holding AgriNurture or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of the vs. AgriNurture
Performance |
| Timeline |
| Bank of the |
| AgriNurture |
Bank of the and AgriNurture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of the and AgriNurture
The main advantage of trading using opposite Bank of the and AgriNurture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the position performs unexpectedly, AgriNurture 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 AgriNurture will offset losses from the drop in AgriNurture's long position.| Bank of the vs. Rizal Commercial Banking | Bank of the vs. Allhome Corp | Bank of the vs. Jollibee Foods Corp | Bank of the vs. LFM Properties Corp |
| AgriNurture vs. Balai Ni Fruitas | AgriNurture vs. Allhome Corp | AgriNurture vs. Jollibee Foods Corp | AgriNurture vs. LFM Properties 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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