Correlation Between Globe Telecom and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Globe Telecom and Metropolitan Bank 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 Globe Telecom and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Telecom and Metropolitan Bank Trust, you can compare the effects of market volatilities on Globe Telecom and Metropolitan Bank 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 Globe Telecom with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Metropolitan Bank.
Diversification Opportunities for Globe Telecom and Metropolitan Bank
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Globe and Metropolitan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and Metropolitan Bank Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Trust and Globe Telecom 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 Globe Telecom are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Trust has no effect on the direction of Globe Telecom i.e., Globe Telecom and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Globe Telecom and Metropolitan Bank
Assuming the 90 days trading horizon Globe Telecom is expected to generate 0.91 times more return on investment than Metropolitan Bank. However, Globe Telecom is 1.1 times less risky than Metropolitan Bank. It trades about 0.15 of its potential returns per unit of risk. Metropolitan Bank Trust is currently generating about -0.17 per unit of risk. If you would invest 210,000 in Globe Telecom on October 25, 2024 and sell it today you would earn a total of 17,200 from holding Globe Telecom or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Telecom vs. Metropolitan Bank Trust
Performance |
| Timeline |
| Globe Telecom |
| Metropolitan Bank Trust |
Globe Telecom and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Telecom and Metropolitan Bank
The main advantage of trading using opposite Globe Telecom and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Globe Telecom vs. Robinsons Retail Holdings | Globe Telecom vs. Crown Asia Chemicals | Globe Telecom vs. Manila Mining Corp | Globe Telecom vs. Metro Retail Stores |
| Metropolitan Bank vs. Cebu Air Preferred | Metropolitan Bank vs. Atlas Consolidated Mining | Metropolitan Bank vs. Globe Telecom | Metropolitan Bank vs. Prime Media Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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