Correlation Between Bank of the and Allhome Corp
Can any of the company-specific risk be diversified away by investing in both Bank of the and Allhome Corp 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 Allhome Corp 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 Allhome Corp, you can compare the effects of market volatilities on Bank of the and Allhome Corp 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 Allhome Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and Allhome Corp.
Diversification Opportunities for Bank of the and Allhome Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Allhome is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and Allhome Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allhome 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 Allhome Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allhome Corp has no effect on the direction of Bank of the i.e., Bank of the and Allhome Corp go up and down completely randomly.
Pair Corralation between Bank of the and Allhome Corp
Assuming the 90 days trading horizon Bank of the is expected to generate 0.78 times more return on investment than Allhome Corp. However, Bank of the is 1.28 times less risky than Allhome Corp. It trades about 0.07 of its potential returns per unit of risk. Allhome Corp is currently generating about -0.08 per unit of risk. If you would invest 11,910 in Bank of the on August 24, 2024 and sell it today you would earn a total of 1,640 from holding Bank of the or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of the vs. Allhome Corp
Performance |
| Timeline |
| Bank of the |
| Allhome Corp |
Bank of the and Allhome Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of the and Allhome Corp
The main advantage of trading using opposite Bank of the and Allhome Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the position performs unexpectedly, Allhome Corp 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 Allhome Corp will offset losses from the drop in Allhome Corp's long position.| Bank of the vs. Lepanto Consolidated Mining | Bank of the vs. Philippine Business Bank | Bank of the vs. SM Investments Corp | Bank of the vs. Globe Telecom |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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