Correlation Between Metropolitan Bank and Ayala Corp
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank and Ayala Corp 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 Metropolitan Bank and Ayala Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Bank Trust and Ayala Corp, you can compare the effects of market volatilities on Metropolitan Bank and Ayala Corp 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 Metropolitan Bank with a short position of Ayala Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and Ayala Corp.
Diversification Opportunities for Metropolitan Bank and Ayala Corp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metropolitan and Ayala is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Trust and Ayala Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Corp and Metropolitan 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 Metropolitan Bank Trust are associated (or correlated) with Ayala Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Corp has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and Ayala Corp go up and down completely randomly.
Pair Corralation between Metropolitan Bank and Ayala Corp
Assuming the 90 days trading horizon Metropolitan Bank Trust is expected to generate 0.7 times more return on investment than Ayala Corp. However, Metropolitan Bank Trust is 1.43 times less risky than Ayala Corp. It trades about 0.02 of its potential returns per unit of risk. Ayala Corp is currently generating about -0.04 per unit of risk. If you would invest 7,525 in Metropolitan Bank Trust on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Metropolitan Bank Trust or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Bank Trust vs. Ayala Corp
Performance |
| Timeline |
| Metropolitan Bank Trust |
| Ayala Corp |
Metropolitan Bank and Ayala Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Bank and Ayala Corp
The main advantage of trading using opposite Metropolitan Bank and Ayala Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank position performs unexpectedly, Ayala Corp 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 Ayala Corp will offset losses from the drop in Ayala Corp's long position.| Metropolitan Bank vs. BDO Unibank | Metropolitan Bank vs. Security Bank Corp | Metropolitan Bank vs. Union Bank of | Metropolitan Bank vs. Philippine National Bank |
| Ayala Corp vs. Concepcion Industrial Corp | Ayala Corp vs. SM Investments Corp | Ayala Corp vs. Semirara Mining Corp | Ayala Corp vs. Cebu Air Preferred |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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