Correlation Between Metro Retail and Union Bank
Can any of the company-specific risk be diversified away by investing in both Metro Retail and Union Bank 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 Union Bank 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 Union Bank of, you can compare the effects of market volatilities on Metro Retail and Union Bank 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 Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and Union Bank.
Diversification Opportunities for Metro Retail and Union Bank
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metro and Union is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank 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 Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of Metro Retail i.e., Metro Retail and Union Bank go up and down completely randomly.
Pair Corralation between Metro Retail and Union Bank
Assuming the 90 days trading horizon Metro Retail Stores is expected to generate 0.81 times more return on investment than Union Bank. However, Metro Retail Stores is 1.23 times less risky than Union Bank. It trades about -0.08 of its potential returns per unit of risk. Union Bank of is currently generating about -0.16 per unit of risk. If you would invest 122.00 in Metro Retail Stores on August 28, 2024 and sell it today you would lose (3.00) from holding Metro Retail Stores or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Metro Retail Stores vs. Union Bank of
Performance |
| Timeline |
| Metro Retail Stores |
| Union Bank |
Metro Retail and Union Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Retail and Union Bank
The main advantage of trading using opposite Metro Retail and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail position performs unexpectedly, Union Bank 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 Union Bank will offset losses from the drop in Union Bank'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 |
| Union Bank vs. Apex Mining Co | Union Bank vs. Suntrust Home Developers | Union Bank vs. SM Investments Corp | Union Bank vs. Philex Mining 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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