Correlation Between National Reinsurance and Araneta Properties
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and Araneta Properties 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 National Reinsurance and Araneta Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and Araneta Properties, you can compare the effects of market volatilities on National Reinsurance and Araneta Properties 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 National Reinsurance with a short position of Araneta Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and Araneta Properties.
Diversification Opportunities for National Reinsurance and Araneta Properties
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Araneta is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and Araneta Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Araneta Properties and National Reinsurance 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 National Reinsurance are associated (or correlated) with Araneta Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Araneta Properties has no effect on the direction of National Reinsurance i.e., National Reinsurance and Araneta Properties go up and down completely randomly.
Pair Corralation between National Reinsurance and Araneta Properties
Assuming the 90 days trading horizon National Reinsurance is expected to generate 2.03 times less return on investment than Araneta Properties. In addition to that, National Reinsurance is 1.26 times more volatile than Araneta Properties. It trades about 0.04 of its total potential returns per unit of risk. Araneta Properties is currently generating about 0.11 per unit of volatility. If you would invest 52.00 in Araneta Properties on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Araneta Properties or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
National Reinsurance vs. Araneta Properties
Performance |
| Timeline |
| National Reinsurance |
| Araneta Properties |
National Reinsurance and Araneta Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and Araneta Properties
The main advantage of trading using opposite National Reinsurance and Araneta Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, Araneta Properties 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 Araneta Properties will offset losses from the drop in Araneta Properties' long position.| National Reinsurance vs. Jollibee Foods Corp | National Reinsurance vs. Philex Mining Corp | National Reinsurance vs. Metropolitan Bank Trust | National Reinsurance vs. BDO Unibank |
| Araneta Properties vs. Metropolitan Bank Trust | Araneta Properties vs. Crown Asia Chemicals | Araneta Properties vs. National Reinsurance | Araneta Properties vs. Prime Media Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |