Correlation Between Bank of the and Axelum Resources
Can any of the company-specific risk be diversified away by investing in both Bank of the and Axelum Resources 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 Axelum Resources 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 Axelum Resources Corp, you can compare the effects of market volatilities on Bank of the and Axelum Resources 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 Axelum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and Axelum Resources.
Diversification Opportunities for Bank of the and Axelum Resources
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Axelum is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and Axelum Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axelum Resources Corp 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 Axelum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axelum Resources Corp has no effect on the direction of Bank of the i.e., Bank of the and Axelum Resources go up and down completely randomly.
Pair Corralation between Bank of the and Axelum Resources
Assuming the 90 days trading horizon Bank of the is expected to generate 0.65 times more return on investment than Axelum Resources. However, Bank of the is 1.55 times less risky than Axelum Resources. It trades about 0.06 of its potential returns per unit of risk. Axelum Resources Corp is currently generating about -0.01 per unit of risk. If you would invest 8,605 in Bank of the on August 29, 2024 and sell it today you would earn a total of 4,445 from holding Bank of the or generate 51.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.22% |
| Values | Daily Returns |
Bank of the vs. Axelum Resources Corp
Performance |
| Timeline |
| Bank of the |
| Axelum Resources Corp |
Bank of the and Axelum Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of the and Axelum Resources
The main advantage of trading using opposite Bank of the and Axelum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the position performs unexpectedly, Axelum Resources 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 Axelum Resources will offset losses from the drop in Axelum Resources' long position.| Bank of the vs. Rizal Commercial Banking | Bank of the vs. Bank of Commerce | Bank of the vs. Allhome Corp | Bank of the vs. Jollibee Foods Corp |
| Axelum Resources vs. Swift Foods | Axelum Resources vs. Allhome Corp | Axelum Resources vs. Jollibee Foods Corp | Axelum Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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