Correlation Between Metropolitan Bank and Lopez Holdings
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank and Lopez Holdings 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 Lopez Holdings 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 Lopez Holdings Corp, you can compare the effects of market volatilities on Metropolitan Bank and Lopez Holdings 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 Lopez Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and Lopez Holdings.
Diversification Opportunities for Metropolitan Bank and Lopez Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metropolitan and Lopez is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Trust and Lopez Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lopez Holdings 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 Lopez Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lopez Holdings Corp has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and Lopez Holdings go up and down completely randomly.
Pair Corralation between Metropolitan Bank and Lopez Holdings
Assuming the 90 days trading horizon Metropolitan Bank Trust is expected to generate 1.18 times more return on investment than Lopez Holdings. However, Metropolitan Bank is 1.18 times more volatile than Lopez Holdings Corp. It trades about 0.02 of its potential returns per unit of risk. Lopez Holdings Corp is currently generating about -0.06 per unit of risk. If you would invest 7,870 in Metropolitan Bank Trust on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Metropolitan Bank Trust or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Metropolitan Bank Trust vs. Lopez Holdings Corp
Performance |
| Timeline |
| Metropolitan Bank Trust |
| Lopez Holdings Corp |
Metropolitan Bank and Lopez Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Bank and Lopez Holdings
The main advantage of trading using opposite Metropolitan Bank and Lopez Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank position performs unexpectedly, Lopez Holdings 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 Lopez Holdings will offset losses from the drop in Lopez Holdings' long position.| Metropolitan Bank vs. Converge Information Communications | Metropolitan Bank vs. COL Financial Group | Metropolitan Bank vs. Metro Retail Stores | Metropolitan Bank vs. Jollibee Foods Corp |
| Lopez Holdings vs. Philex Mining Corp | Lopez Holdings vs. Metropolitan Bank Trust | Lopez Holdings vs. Sun Life Financial | Lopez Holdings vs. Transpacific Broadband Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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