Correlation Between DBS Group and First Foundation
Can any of the company-specific risk be diversified away by investing in both DBS Group and First Foundation 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 DBS Group and First Foundation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBS Group Holdings and First Foundation, you can compare the effects of market volatilities on DBS Group and First Foundation 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 DBS Group with a short position of First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and First Foundation.
Diversification Opportunities for DBS Group and First Foundation
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DBS and First is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation and DBS Group 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 DBS Group Holdings are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of DBS Group i.e., DBS Group and First Foundation go up and down completely randomly.
Pair Corralation between DBS Group and First Foundation
Assuming the 90 days horizon DBS Group Holdings is expected to generate 0.91 times more return on investment than First Foundation. However, DBS Group Holdings is 1.1 times less risky than First Foundation. It trades about 0.07 of its potential returns per unit of risk. First Foundation is currently generating about -0.02 per unit of risk. If you would invest 2,043 in DBS Group Holdings on December 3, 2024 and sell it today you would earn a total of 1,357 from holding DBS Group Holdings or generate 66.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
DBS Group Holdings vs. First Foundation
Performance |
| Timeline |
| DBS Group Holdings |
| First Foundation |
DBS Group and First Foundation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBS Group and First Foundation
The main advantage of trading using opposite DBS Group and First Foundation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group position performs unexpectedly, First Foundation 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 First Foundation will offset losses from the drop in First Foundation's long position.| DBS Group vs. United Overseas Bank | ||
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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