Correlation Between Manila Electric and Wilcon Depot
Can any of the company-specific risk be diversified away by investing in both Manila Electric and Wilcon Depot 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 Wilcon Depot 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 Wilcon Depot, you can compare the effects of market volatilities on Manila Electric and Wilcon Depot 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 Wilcon Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Electric and Wilcon Depot.
Diversification Opportunities for Manila Electric and Wilcon Depot
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Manila and Wilcon is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Manila Electric Co and Wilcon Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilcon Depot 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 Wilcon Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilcon Depot has no effect on the direction of Manila Electric i.e., Manila Electric and Wilcon Depot go up and down completely randomly.
Pair Corralation between Manila Electric and Wilcon Depot
Assuming the 90 days trading horizon Manila Electric Co is expected to generate 0.82 times more return on investment than Wilcon Depot. However, Manila Electric Co is 1.21 times less risky than Wilcon Depot. It trades about 0.08 of its potential returns per unit of risk. Wilcon Depot is currently generating about -0.08 per unit of risk. If you would invest 30,513 in Manila Electric Co on August 27, 2024 and sell it today you would earn a total of 18,087 from holding Manila Electric Co or generate 59.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manila Electric Co vs. Wilcon Depot
Performance |
| Timeline |
| Manila Electric |
| Wilcon Depot |
Manila Electric and Wilcon Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Electric and Wilcon Depot
The main advantage of trading using opposite Manila Electric and Wilcon Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Electric position performs unexpectedly, Wilcon Depot 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 Wilcon Depot will offset losses from the drop in Wilcon Depot's long position.| Manila Electric vs. Aboitiz Equity Ventures | Manila Electric vs. Allhome Corp | Manila Electric vs. LFM Properties Corp | Manila Electric vs. Altus Property Ventures |
| Wilcon Depot vs. Converge Information Communications | Wilcon Depot vs. Top Frontier Investment | Wilcon Depot vs. Jollibee Foods Corp | Wilcon Depot vs. Globe Telecom |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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