Correlation Between Banco Do and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Banco Do and GSK Plc 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 Banco Do and GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Estado and GSK plc, you can compare the effects of market volatilities on Banco Do and GSK Plc 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 Banco Do with a short position of GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and GSK Plc.
Diversification Opportunities for Banco Do and GSK Plc
Very good diversification
The 3 months correlation between Banco and GSK is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Estado and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK plc and Banco Do 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 Banco do Estado are associated (or correlated) with GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of Banco Do i.e., Banco Do and GSK Plc go up and down completely randomly.
Pair Corralation between Banco Do and GSK Plc
Assuming the 90 days trading horizon Banco do Estado is expected to generate 1.37 times more return on investment than GSK Plc. However, Banco Do is 1.37 times more volatile than GSK plc. It trades about 0.05 of its potential returns per unit of risk. GSK plc is currently generating about -0.04 per unit of risk. If you would invest 1,477 in Banco do Estado on September 1, 2024 and sell it today you would earn a total of 194.00 from holding Banco do Estado or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco do Estado vs. GSK plc
Performance |
| Timeline |
| Banco do Estado |
| GSK plc |
Banco Do and GSK Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and GSK Plc
The main advantage of trading using opposite Banco Do and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.| Banco Do vs. Marfrig Global Foods | Banco Do vs. Micron Technology | Banco Do vs. Mitsubishi UFJ Financial | Banco Do vs. Unity Software |
| GSK Plc vs. Energisa SA | GSK Plc vs. BTG Pactual Logstica | GSK Plc vs. Plano Plano Desenvolvimento | GSK Plc vs. Companhia Habitasul de |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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