Correlation Between Exchange Bank and Foreign Trade
Can any of the company-specific risk be diversified away by investing in both Exchange Bank and Foreign Trade 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 Exchange Bank and Foreign Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Bank and Foreign Trade Bank, you can compare the effects of market volatilities on Exchange Bank and Foreign Trade 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 Exchange Bank with a short position of Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Bank and Foreign Trade.
Diversification Opportunities for Exchange Bank and Foreign Trade
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Exchange and Foreign is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Bank and Foreign Trade Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Bank and Exchange Bank 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 Exchange Bank are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Bank has no effect on the direction of Exchange Bank i.e., Exchange Bank and Foreign Trade go up and down completely randomly.
Pair Corralation between Exchange Bank and Foreign Trade
Given the investment horizon of 90 days Exchange Bank is expected to generate 6.97 times less return on investment than Foreign Trade. In addition to that, Exchange Bank is 1.18 times more volatile than Foreign Trade Bank. It trades about 0.01 of its total potential returns per unit of risk. Foreign Trade Bank is currently generating about 0.12 per unit of volatility. If you would invest 3,262 in Foreign Trade Bank on August 28, 2024 and sell it today you would earn a total of 136.00 from holding Foreign Trade Bank or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exchange Bank vs. Foreign Trade Bank
Performance |
| Timeline |
| Exchange Bank |
| Foreign Trade Bank |
Exchange Bank and Foreign Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Bank and Foreign Trade
The main advantage of trading using opposite Exchange Bank and Foreign Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Bank position performs unexpectedly, Foreign Trade 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 Foreign Trade will offset losses from the drop in Foreign Trade's long position.| Exchange Bank vs. Foreign Trade Bank | Exchange Bank vs. Comerica | Exchange Bank vs. Delhi Bank Corp | Exchange Bank vs. CCSB Financial Corp |
| Foreign Trade vs. Banco Santander Chile | Foreign Trade vs. Bancolombia SA ADR | Foreign Trade vs. Banco Bradesco SA | Foreign Trade vs. Credicorp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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