Correlation Between Metropolitan Bank and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank 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 Metropolitan Bank and BDO Unibank 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 BDO Unibank, you can compare the effects of market volatilities on Metropolitan Bank 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 Metropolitan Bank with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and BDO Unibank.
Diversification Opportunities for Metropolitan Bank and BDO Unibank
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Metropolitan and BDO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Trust and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank 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 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 has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and BDO Unibank go up and down completely randomly.
Pair Corralation between Metropolitan Bank and BDO Unibank
Assuming the 90 days trading horizon Metropolitan Bank Trust is expected to under-perform the BDO Unibank. But the stock apears to be less risky and, when comparing its historical volatility, Metropolitan Bank Trust is 1.23 times less risky than BDO Unibank. The stock trades about -0.16 of its potential returns per unit of risk. The BDO Unibank is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 14,510 in BDO Unibank on October 24, 2024 and sell it today you would lose (110.00) from holding BDO Unibank or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Bank Trust vs. BDO Unibank
Performance |
| Timeline |
| Metropolitan Bank Trust |
| BDO Unibank |
Metropolitan Bank and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Bank and BDO Unibank
The main advantage of trading using opposite Metropolitan Bank and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank 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.| Metropolitan Bank vs. Metro Retail Stores | Metropolitan Bank vs. Premiere Entertainment | Metropolitan Bank vs. Jollibee Foods Corp | Metropolitan Bank vs. Philippine Business Bank |
| BDO Unibank vs. Metropolitan Bank Trust | BDO Unibank vs. Robinsons Retail Holdings | BDO Unibank vs. East West Banking | BDO Unibank vs. Rizal Commercial Banking |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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