Correlation Between Bank of the and GT Capital
Can any of the company-specific risk be diversified away by investing in both Bank of the and GT Capital 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 GT Capital 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 GT Capital Holdings, you can compare the effects of market volatilities on Bank of the and GT Capital 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 GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and GT Capital.
Diversification Opportunities for Bank of the and GT Capital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and GTCAP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings 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 GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of Bank of the i.e., Bank of the and GT Capital go up and down completely randomly.
Pair Corralation between Bank of the and GT Capital
Assuming the 90 days trading horizon Bank of the is expected to generate 1.04 times more return on investment than GT Capital. However, Bank of the is 1.04 times more volatile than GT Capital Holdings. It trades about -0.11 of its potential returns per unit of risk. GT Capital Holdings is currently generating about -0.68 per unit of risk. If you would invest 12,200 in Bank of the on November 3, 2024 and sell it today you would lose (580.00) from holding Bank of the or give up 4.75% 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. GT Capital Holdings
Performance |
| Timeline |
| Bank of the |
| GT Capital Holdings |
Bank of the and GT Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of the and GT Capital
The main advantage of trading using opposite Bank of the and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the position performs unexpectedly, GT Capital 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 GT Capital will offset losses from the drop in GT Capital's long position.| Bank of the vs. Lepanto Consolidated Mining | Bank of the vs. Metro Retail Stores | Bank of the vs. Integrated Micro Electronics | Bank of the vs. Converge Information Communications |
| GT Capital vs. Asia United Bank | GT Capital vs. Apex Mining Co | GT Capital vs. Philex Mining Corp | GT Capital vs. Lepanto Consolidated Mining |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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