Correlation Between Alliance Select and Bank of the
Can any of the company-specific risk be diversified away by investing in both Alliance Select and Bank of the 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 Alliance Select and Bank of the into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Select Foods and Bank of the, you can compare the effects of market volatilities on Alliance Select and Bank of the 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 Alliance Select with a short position of Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Select and Bank of the.
Diversification Opportunities for Alliance Select and Bank of the
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alliance and Bank is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Select Foods and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and Alliance Select 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 Alliance Select Foods are associated (or correlated) with Bank of the. 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 has no effect on the direction of Alliance Select i.e., Alliance Select and Bank of the go up and down completely randomly.
Pair Corralation between Alliance Select and Bank of the
Assuming the 90 days trading horizon Alliance Select Foods is expected to generate 1.37 times more return on investment than Bank of the. However, Alliance Select is 1.37 times more volatile than Bank of the. It trades about -0.14 of its potential returns per unit of risk. Bank of the is currently generating about -0.4 per unit of risk. If you would invest 39.00 in Alliance Select Foods on August 28, 2024 and sell it today you would lose (1.00) from holding Alliance Select Foods or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 45.0% |
| Values | Daily Returns |
Alliance Select Foods vs. Bank of the
Performance |
| Timeline |
| Alliance Select Foods |
| Bank of the |
Alliance Select and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Select and Bank of the
The main advantage of trading using opposite Alliance Select and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Select position performs unexpectedly, Bank of the 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 will offset losses from the drop in Bank of the's long position.| Alliance Select vs. Atlas Consolidated Mining | Alliance Select vs. Semirara Mining Corp | Alliance Select vs. Apex Mining Co | Alliance Select vs. Lepanto Consolidated Mining |
| Bank of the vs. Rizal Commercial Banking | Bank of the vs. Allhome Corp | Bank of the vs. Jollibee Foods Corp | Bank of the vs. LFM Properties Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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