Correlation Between Bank of the and COL Financial
Can any of the company-specific risk be diversified away by investing in both Bank of the and COL Financial 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 COL Financial 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 COL Financial Group, you can compare the effects of market volatilities on Bank of the and COL Financial 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 COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and COL Financial.
Diversification Opportunities for Bank of the and COL Financial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and COL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group 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 COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of Bank of the i.e., Bank of the and COL Financial go up and down completely randomly.
Pair Corralation between Bank of the and COL Financial
Assuming the 90 days trading horizon Bank of the is expected to generate 0.81 times more return on investment than COL Financial. However, Bank of the is 1.23 times less risky than COL Financial. It trades about 0.06 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.03 per unit of risk. If you would invest 9,709 in Bank of the on August 24, 2024 and sell it today you would earn a total of 3,721 from holding Bank of the or generate 38.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.27% |
| Values | Daily Returns |
Bank of the vs. COL Financial Group
Performance |
| Timeline |
| Bank of the |
| COL Financial Group |
Bank of the and COL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of the and COL Financial
The main advantage of trading using opposite Bank of the and COL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the position performs unexpectedly, COL Financial 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 COL Financial will offset losses from the drop in COL Financial's long position.| Bank of the vs. Atlas Consolidated Mining | Bank of the vs. Philex Mining Corp | Bank of the vs. BDO Unibank | Bank of the vs. COL Financial Group |
| COL Financial vs. Bank of the | COL Financial vs. Sun Life Financial | COL Financial vs. Asia United Bank | COL Financial vs. Converge Information Communications |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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