Correlation Between Security Bank and PXP Energy
Can any of the company-specific risk be diversified away by investing in both Security Bank and PXP Energy 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 Security Bank and PXP Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Bank Corp and PXP Energy Corp, you can compare the effects of market volatilities on Security Bank and PXP Energy 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 Security Bank with a short position of PXP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and PXP Energy.
Diversification Opportunities for Security Bank and PXP Energy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Security and PXP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and PXP Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PXP Energy Corp and Security Bank 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 Security Bank Corp are associated (or correlated) with PXP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PXP Energy Corp has no effect on the direction of Security Bank i.e., Security Bank and PXP Energy go up and down completely randomly.
Pair Corralation between Security Bank and PXP Energy
Assuming the 90 days trading horizon Security Bank Corp is expected to generate 0.45 times more return on investment than PXP Energy. However, Security Bank Corp is 2.22 times less risky than PXP Energy. It trades about 0.05 of its potential returns per unit of risk. PXP Energy Corp is currently generating about 0.01 per unit of risk. If you would invest 7,057 in Security Bank Corp on September 1, 2024 and sell it today you would earn a total of 1,623 from holding Security Bank Corp or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
Security Bank Corp vs. PXP Energy Corp
Performance |
| Timeline |
| Security Bank Corp |
| PXP Energy Corp |
Security Bank and PXP Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Bank and PXP Energy
The main advantage of trading using opposite Security Bank and PXP Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Bank position performs unexpectedly, PXP Energy 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 PXP Energy will offset losses from the drop in PXP Energy's long position.| Security Bank vs. Metropolitan Bank Trust | Security Bank vs. Philippine National Bank | Security Bank vs. Asia United Bank | Security Bank vs. Philippine Savings Bank |
| PXP Energy vs. SM Investments Corp | PXP Energy vs. San Miguel Pure | PXP Energy vs. Ayala Corp | PXP Energy vs. Ayala Land |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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