Correlation Between Jollibee Foods and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both Jollibee Foods and BDO Unibank 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 Jollibee Foods and BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jollibee Foods Corp and BDO Unibank ADR, you can compare the effects of market volatilities on Jollibee Foods and BDO Unibank 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 Jollibee Foods with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jollibee Foods and BDO Unibank.
Diversification Opportunities for Jollibee Foods and BDO Unibank
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Jollibee and BDO is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and BDO Unibank ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank ADR and Jollibee Foods 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 Jollibee Foods Corp are associated (or correlated) with BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank ADR has no effect on the direction of Jollibee Foods i.e., Jollibee Foods and BDO Unibank go up and down completely randomly.
Pair Corralation between Jollibee Foods and BDO Unibank
Assuming the 90 days horizon Jollibee Foods is expected to generate 2.62 times less return on investment than BDO Unibank. But when comparing it to its historical volatility, Jollibee Foods Corp is 1.04 times less risky than BDO Unibank. It trades about 0.02 of its potential returns per unit of risk. BDO Unibank ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,784 in BDO Unibank ADR on August 30, 2024 and sell it today you would earn a total of 851.00 from holding BDO Unibank ADR or generate 47.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.92% |
| Values | Daily Returns |
Jollibee Foods Corp vs. BDO Unibank ADR
Performance |
| Timeline |
| Jollibee Foods Corp |
| BDO Unibank ADR |
Jollibee Foods and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jollibee Foods and BDO Unibank
The main advantage of trading using opposite Jollibee Foods and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jollibee Foods position performs unexpectedly, BDO Unibank 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 BDO Unibank will offset losses from the drop in BDO Unibank's long position.| Jollibee Foods vs. McDonalds | Jollibee Foods vs. Starbucks | Jollibee Foods vs. Chipotle Mexican Grill | Jollibee Foods vs. Yum Brands |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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