Correlation Between Dow Jones and Bank of the Philippine Is
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Bank of the Philippine Is 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 Dow Jones and Bank of the Philippine Is into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Bank of the, you can compare the effects of market volatilities on Dow Jones and Bank of the Philippine Is 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 Dow Jones with a short position of Bank of the Philippine Is. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bank of the Philippine Is.
Diversification Opportunities for Dow Jones and Bank of the Philippine Is
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Bank is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the Philippine Is and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Bank of the Philippine Is. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the Philippine Is has no effect on the direction of Dow Jones i.e., Dow Jones and Bank of the Philippine Is go up and down completely randomly.
Pair Corralation between Dow Jones and Bank of the Philippine Is
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.28 times more return on investment than Bank of the Philippine Is. However, Dow Jones Industrial is 3.54 times less risky than Bank of the Philippine Is. It trades about 0.26 of its potential returns per unit of risk. Bank of the is currently generating about -0.13 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bank of the
Performance |
| Timeline |
Dow Jones and Bank of the Philippine Is Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bank of the
Pair trading matchups for Bank of the Philippine Is
Pair Trading with Dow Jones and Bank of the Philippine Is
The main advantage of trading using opposite Dow Jones and Bank of the Philippine Is positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Bank of the Philippine Is 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 Bank of the Philippine Is will offset losses from the drop in Bank of the Philippine Is' long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Bank of the Philippine Is vs. BOC Hong Kong | Bank of the Philippine Is vs. China Merchants Bank | Bank of the Philippine Is vs. BDO Unibank ADR | Bank of the Philippine Is vs. United Security Bancshares |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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