Correlation Between Metropolitan Bank and Bank of the
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank and Bank of the 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 Bank of the 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 Bank of the, you can compare the effects of market volatilities on Metropolitan Bank and Bank of the 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 Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and Bank of the.
Diversification Opportunities for Metropolitan Bank and Bank of the
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metropolitan and Bank is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Trust and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the 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 Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and Bank of the go up and down completely randomly.
Pair Corralation between Metropolitan Bank and Bank of the
Assuming the 90 days trading horizon Metropolitan Bank Trust is expected to generate 1.28 times more return on investment than Bank of the. However, Metropolitan Bank is 1.28 times more volatile than Bank of the. It trades about -0.07 of its potential returns per unit of risk. Bank of the is currently generating about -0.16 per unit of risk. If you would invest 7,870 in Metropolitan Bank Trust on October 26, 2024 and sell it today you would lose (740.00) from holding Metropolitan Bank Trust or give up 9.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Bank Trust vs. Bank of the
Performance |
| Timeline |
| Metropolitan Bank Trust |
| Bank of the |
Metropolitan Bank and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Bank and Bank of the
The main advantage of trading using opposite Metropolitan Bank and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank position performs unexpectedly, Bank of the 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 Bank of the will offset losses from the drop in Bank of the's long position.| Metropolitan Bank vs. National Reinsurance | Metropolitan Bank vs. Cebu Air Preferred | Metropolitan Bank vs. Converge Information Communications | Metropolitan Bank vs. BDO Unibank |
| Bank of the vs. Metropolitan Bank Trust | Bank of the vs. National Reinsurance | Bank of the vs. STI Education Systems | Bank of the vs. Integrated Micro Electronics |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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