Correlation Between Bank of the and Lepanto Consolidated
Can any of the company-specific risk be diversified away by investing in both Bank of the and Lepanto Consolidated 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 Lepanto Consolidated 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 Lepanto Consolidated Mining, you can compare the effects of market volatilities on Bank of the and Lepanto Consolidated 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 Lepanto Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and Lepanto Consolidated.
Diversification Opportunities for Bank of the and Lepanto Consolidated
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Lepanto is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated 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 Lepanto Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepanto Consolidated has no effect on the direction of Bank of the i.e., Bank of the and Lepanto Consolidated go up and down completely randomly.
Pair Corralation between Bank of the and Lepanto Consolidated
Assuming the 90 days trading horizon Bank of the is expected to generate 15.11 times less return on investment than Lepanto Consolidated. But when comparing it to its historical volatility, Bank of the is 1.99 times less risky than Lepanto Consolidated. It trades about 0.01 of its potential returns per unit of risk. Lepanto Consolidated Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6.60 in Lepanto Consolidated Mining on October 23, 2024 and sell it today you would earn a total of 0.20 from holding Lepanto Consolidated Mining or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of the vs. Lepanto Consolidated Mining
Performance |
| Timeline |
| Bank of the |
| Lepanto Consolidated |
Bank of the and Lepanto Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of the and Lepanto Consolidated
The main advantage of trading using opposite Bank of the and Lepanto Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the position performs unexpectedly, Lepanto Consolidated 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 Lepanto Consolidated will offset losses from the drop in Lepanto Consolidated's long position.| Bank of the vs. House of Investments | Bank of the vs. Asia United Bank | Bank of the vs. Philippine Savings Bank | Bank of the vs. Allhome Corp |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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