Correlation Between Philippine National and Swift Foods
Can any of the company-specific risk be diversified away by investing in both Philippine National and Swift Foods 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 Philippine National and Swift Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine National Bank and Swift Foods, you can compare the effects of market volatilities on Philippine National and Swift Foods 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 Philippine National with a short position of Swift Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine National and Swift Foods.
Diversification Opportunities for Philippine National and Swift Foods
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Philippine and Swift is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Philippine National Bank and Swift Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Foods and Philippine National 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 Philippine National Bank are associated (or correlated) with Swift Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Foods has no effect on the direction of Philippine National i.e., Philippine National and Swift Foods go up and down completely randomly.
Pair Corralation between Philippine National and Swift Foods
Assuming the 90 days trading horizon Philippine National is expected to generate 2.16 times less return on investment than Swift Foods. But when comparing it to its historical volatility, Philippine National Bank is 3.37 times less risky than Swift Foods. It trades about 0.01 of its potential returns per unit of risk. Swift Foods is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.90 in Swift Foods on August 25, 2024 and sell it today you would lose (0.10) from holding Swift Foods or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Philippine National Bank vs. Swift Foods
Performance |
| Timeline |
| Philippine National Bank |
| Swift Foods |
Philippine National and Swift Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine National and Swift Foods
The main advantage of trading using opposite Philippine National and Swift Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine National position performs unexpectedly, Swift Foods 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 Swift Foods will offset losses from the drop in Swift Foods' long position.| Philippine National vs. Lepanto Consolidated Mining | Philippine National vs. Metropolitan Bank Trust | Philippine National vs. Semirara Mining Corp | Philippine National vs. Rizal Commercial Banking |
| Swift Foods vs. Converge Information Communications | Swift Foods vs. Allhome Corp | Swift Foods vs. Lepanto Consolidated Mining | Swift Foods vs. Jollibee Foods 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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