Correlation Between Snap and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both Snap and BDO Unibank 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 Snap and BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and BDO Unibank ADR, you can compare the effects of market volatilities on Snap and BDO Unibank 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 Snap with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and BDO Unibank.
Diversification Opportunities for Snap and BDO Unibank
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and BDO is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and BDO Unibank ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank ADR and Snap 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 Snap Inc are associated (or correlated) with BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank ADR has no effect on the direction of Snap i.e., Snap and BDO Unibank go up and down completely randomly.
Pair Corralation between Snap and BDO Unibank
Given the investment horizon of 90 days Snap Inc is expected to under-perform the BDO Unibank. In addition to that, Snap is 1.28 times more volatile than BDO Unibank ADR. It trades about -0.11 of its total potential returns per unit of risk. BDO Unibank ADR is currently generating about -0.05 per unit of volatility. If you would invest 2,686 in BDO Unibank ADR on August 31, 2024 and sell it today you would lose (82.00) from holding BDO Unibank ADR or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. BDO Unibank ADR
Performance |
| Timeline |
| Snap Inc |
| BDO Unibank ADR |
Snap and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and BDO Unibank
The main advantage of trading using opposite Snap and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, BDO Unibank 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 BDO Unibank will offset losses from the drop in BDO Unibank's long position.The idea behind Snap Inc and BDO Unibank ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BDO Unibank vs. Swedbank AB | BDO Unibank vs. United Overseas Bank | BDO Unibank vs. KBC Groep NV | BDO Unibank vs. Jyske Bank AS |
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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