Correlation Between Philippine Savings and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Metropolitan 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 Philippine Savings and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine Savings Bank and Metropolitan Bank Trust, you can compare the effects of market volatilities on Philippine Savings and Metropolitan 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 Philippine Savings with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Metropolitan Bank.
Diversification Opportunities for Philippine Savings and Metropolitan Bank
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Philippine and Metropolitan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Metropolitan Bank Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Trust and Philippine Savings 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 Savings Bank are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Trust has no effect on the direction of Philippine Savings i.e., Philippine Savings and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Philippine Savings and Metropolitan Bank
Assuming the 90 days trading horizon Philippine Savings is expected to generate 1.09 times less return on investment than Metropolitan Bank. But when comparing it to its historical volatility, Philippine Savings Bank is 1.19 times less risky than Metropolitan Bank. It trades about 0.04 of its potential returns per unit of risk. Metropolitan Bank Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,526 in Metropolitan Bank Trust on January 28, 2025 and sell it today you would earn a total of 709.00 from holding Metropolitan Bank Trust or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.89% |
| Values | Daily Returns |
Philippine Savings Bank vs. Metropolitan Bank Trust
Performance |
| Timeline |
| Philippine Savings Bank |
| Metropolitan Bank Trust |
Philippine Savings and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and Metropolitan Bank
The main advantage of trading using opposite Philippine Savings and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, Metropolitan 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Philippine Savings vs. Apex Mining Co | Philippine Savings vs. Transpacific Broadband Group | Philippine Savings vs. Converge Information Communications | Philippine Savings vs. Swift Foods |
| Metropolitan Bank vs. Top Frontier Investment | Metropolitan Bank vs. Atlas Consolidated Mining | Metropolitan Bank vs. Metro Retail Stores | Metropolitan Bank vs. Swift Foods |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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