Correlation Between Galp Energia and Banco Comercial
Can any of the company-specific risk be diversified away by investing in both Galp Energia and Banco Comercial 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 Galp Energia and Banco Comercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galp Energia SGPS and Banco Comercial Portugues, you can compare the effects of market volatilities on Galp Energia and Banco Comercial 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 Galp Energia with a short position of Banco Comercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galp Energia and Banco Comercial.
Diversification Opportunities for Galp Energia and Banco Comercial
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Galp and Banco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Galp Energia SGPS and Banco Comercial Portugues in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Comercial Portugues and Galp Energia 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 Galp Energia SGPS are associated (or correlated) with Banco Comercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Comercial Portugues has no effect on the direction of Galp Energia i.e., Galp Energia and Banco Comercial go up and down completely randomly.
Pair Corralation between Galp Energia and Banco Comercial
Assuming the 90 days trading horizon Galp Energia SGPS is expected to under-perform the Banco Comercial. But the stock apears to be less risky and, when comparing its historical volatility, Galp Energia SGPS is 1.92 times less risky than Banco Comercial. The stock trades about -0.09 of its potential returns per unit of risk. The Banco Comercial Portugues is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Banco Comercial Portugues on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Banco Comercial Portugues or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galp Energia SGPS vs. Banco Comercial Portugues
Performance |
| Timeline |
| Galp Energia SGPS |
| Banco Comercial Portugues |
Galp Energia and Banco Comercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galp Energia and Banco Comercial
The main advantage of trading using opposite Galp Energia and Banco Comercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galp Energia position performs unexpectedly, Banco Comercial 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 Banco Comercial will offset losses from the drop in Banco Comercial's long position.| Galp Energia vs. EDP Energias | Galp Energia vs. Sonae SGPS SA | Galp Energia vs. Banco Comercial Portugues | Galp Energia vs. NOS SGPS SA |
| Banco Comercial vs. Sonae SGPS SA | Banco Comercial vs. Galp Energia SGPS | Banco Comercial vs. EDP Energias | Banco Comercial vs. CTT Correios 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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