Correlation Between Metro Retail and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both Metro Retail 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 Metro Retail and BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Retail Stores and BDO Unibank, you can compare the effects of market volatilities on Metro Retail 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 Metro Retail with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and BDO Unibank.
Diversification Opportunities for Metro Retail and BDO Unibank
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metro and BDO is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank and Metro Retail 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 Metro Retail Stores 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 Metro Retail i.e., Metro Retail and BDO Unibank go up and down completely randomly.
Pair Corralation between Metro Retail and BDO Unibank
Assuming the 90 days trading horizon Metro Retail is expected to generate 2.04 times less return on investment than BDO Unibank. In addition to that, Metro Retail is 1.02 times more volatile than BDO Unibank. It trades about 0.02 of its total potential returns per unit of risk. BDO Unibank is currently generating about 0.05 per unit of volatility. If you would invest 12,445 in BDO Unibank on August 25, 2024 and sell it today you would earn a total of 2,755 from holding BDO Unibank or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.4% |
| Values | Daily Returns |
Metro Retail Stores vs. BDO Unibank
Performance |
| Timeline |
| Metro Retail Stores |
| BDO Unibank |
Metro Retail and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Retail and BDO Unibank
The main advantage of trading using opposite Metro Retail and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail 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.| Metro Retail vs. Allhome Corp | Metro Retail vs. Jollibee Foods Corp | Metro Retail vs. LFM Properties Corp | Metro Retail vs. PXP Energy Corp |
| BDO Unibank vs. Metro Retail Stores | BDO Unibank vs. Transpacific Broadband Group | BDO Unibank vs. Jollibee Foods Corp | BDO Unibank vs. Pacificonline Systems |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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