Correlation Between Bank Polska and WSE WIG
Can any of the company-specific risk be diversified away by investing in both Bank Polska and WSE WIG 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 Bank Polska and WSE WIG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Polska Kasa and WSE WIG INDEX, you can compare the effects of market volatilities on Bank Polska and WSE WIG 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 Bank Polska with a short position of WSE WIG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and WSE WIG.
Diversification Opportunities for Bank Polska and WSE WIG
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and WSE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and WSE WIG INDEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSE WIG INDEX and Bank Polska 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 Bank Polska Kasa are associated (or correlated) with WSE WIG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSE WIG INDEX has no effect on the direction of Bank Polska i.e., Bank Polska and WSE WIG go up and down completely randomly.
Pair Corralation between Bank Polska and WSE WIG
Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 1.83 times more return on investment than WSE WIG. However, Bank Polska is 1.83 times more volatile than WSE WIG INDEX. It trades about 0.08 of its potential returns per unit of risk. WSE WIG INDEX is currently generating about 0.07 per unit of risk. If you would invest 7,298 in Bank Polska Kasa on August 26, 2024 and sell it today you would earn a total of 6,637 from holding Bank Polska Kasa or generate 90.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank Polska Kasa vs. WSE WIG INDEX
Performance |
| Timeline |
Bank Polska and WSE WIG Volatility Contrast
Predicted Return Density |
| Returns |
Bank Polska Kasa
Pair trading matchups for Bank Polska
WSE WIG INDEX
Pair trading matchups for WSE WIG
Pair Trading with Bank Polska and WSE WIG
The main advantage of trading using opposite Bank Polska and WSE WIG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Polska position performs unexpectedly, WSE WIG 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 WSE WIG will offset losses from the drop in WSE WIG's long position.| Bank Polska vs. GreenX Metals | Bank Polska vs. Intersport Polska SA | Bank Polska vs. Mlk Foods Public | Bank Polska vs. Quantum Software SA |
| WSE WIG vs. SOFTWARE MANSION SPOLKA | WSE WIG vs. New Tech Venture | WSE WIG vs. Santander Bank Polska | WSE WIG vs. Skyline Investment SA |
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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