Correlation Between Manila Electric and VistaREIT
Can any of the company-specific risk be diversified away by investing in both Manila Electric and VistaREIT 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 Manila Electric and VistaREIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Electric Co and VistaREIT, you can compare the effects of market volatilities on Manila Electric and VistaREIT 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 Manila Electric with a short position of VistaREIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Electric and VistaREIT.
Diversification Opportunities for Manila Electric and VistaREIT
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manila and VistaREIT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Manila Electric Co and VistaREIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VistaREIT and Manila Electric 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 Manila Electric Co are associated (or correlated) with VistaREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VistaREIT has no effect on the direction of Manila Electric i.e., Manila Electric and VistaREIT go up and down completely randomly.
Pair Corralation between Manila Electric and VistaREIT
Assuming the 90 days trading horizon Manila Electric Co is expected to generate 1.66 times more return on investment than VistaREIT. However, Manila Electric is 1.66 times more volatile than VistaREIT. It trades about 0.09 of its potential returns per unit of risk. VistaREIT is currently generating about 0.06 per unit of risk. If you would invest 24,708 in Manila Electric Co on September 3, 2024 and sell it today you would earn a total of 23,192 from holding Manila Electric Co or generate 93.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manila Electric Co vs. VistaREIT
Performance |
| Timeline |
| Manila Electric |
| VistaREIT |
Manila Electric and VistaREIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Electric and VistaREIT
The main advantage of trading using opposite Manila Electric and VistaREIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Electric position performs unexpectedly, VistaREIT 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 VistaREIT will offset losses from the drop in VistaREIT's long position.| Manila Electric vs. Philippine Business Bank | Manila Electric vs. Premiere Entertainment | Manila Electric vs. COL Financial Group | Manila Electric vs. Union Bank of |
| VistaREIT vs. Bright Kindle Resources | VistaREIT vs. GT Capital Holdings | VistaREIT vs. Allhome Corp | VistaREIT vs. Jollibee Foods Corp |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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