Correlation Between Pepco Group and Bank Polska
Can any of the company-specific risk be diversified away by investing in both Pepco Group and Bank Polska 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 Pepco Group and Bank Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pepco Group BV and Bank Polska Kasa, you can compare the effects of market volatilities on Pepco Group and Bank Polska 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 Pepco Group with a short position of Bank Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and Bank Polska.
Diversification Opportunities for Pepco Group and Bank Polska
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pepco and Bank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and Bank Polska Kasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Polska Kasa and Pepco Group 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 Pepco Group BV are associated (or correlated) with Bank Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Polska Kasa has no effect on the direction of Pepco Group i.e., Pepco Group and Bank Polska go up and down completely randomly.
Pair Corralation between Pepco Group and Bank Polska
Assuming the 90 days trading horizon Pepco Group BV is expected to under-perform the Bank Polska. In addition to that, Pepco Group is 1.35 times more volatile than Bank Polska Kasa. It trades about -0.06 of its total potential returns per unit of risk. Bank Polska Kasa is currently generating about 0.08 per unit of volatility. If you would invest 7,766 in Bank Polska Kasa on October 23, 2024 and sell it today you would earn a total of 6,959 from holding Bank Polska Kasa or generate 89.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pepco Group BV vs. Bank Polska Kasa
Performance |
| Timeline |
| Pepco Group BV |
| Bank Polska Kasa |
Pepco Group and Bank Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and Bank Polska
The main advantage of trading using opposite Pepco Group and Bank Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, Bank Polska 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 Bank Polska will offset losses from the drop in Bank Polska's long position.| Pepco Group vs. Echo Investment SA | Pepco Group vs. GreenX Metals | Pepco Group vs. Marie Brizard Wine | Pepco Group vs. Skyline Investment SA |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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