Correlation Between Snap and Bank of the Philippine Is
Can any of the company-specific risk be diversified away by investing in both Snap and Bank of the Philippine Is 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 Bank of the Philippine Is into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Bank of the, you can compare the effects of market volatilities on Snap and Bank of the Philippine Is 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 Bank of the Philippine Is. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Bank of the Philippine Is.
Diversification Opportunities for Snap and Bank of the Philippine Is
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Bank is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the Philippine Is 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 Bank of the Philippine Is. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the Philippine Is has no effect on the direction of Snap i.e., Snap and Bank of the Philippine Is go up and down completely randomly.
Pair Corralation between Snap and Bank of the Philippine Is
Given the investment horizon of 90 days Snap Inc is expected to generate 1.34 times more return on investment than Bank of the Philippine Is. However, Snap is 1.34 times more volatile than Bank of the. It trades about 0.1 of its potential returns per unit of risk. Bank of the is currently generating about -0.13 per unit of risk. If you would invest 1,071 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Bank of the
Performance |
| Timeline |
| Snap Inc |
| Bank of the Philippine Is |
Snap and Bank of the Philippine Is Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Bank of the Philippine Is
The main advantage of trading using opposite Snap and Bank of the Philippine Is positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Bank of the Philippine Is 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 Bank of the Philippine Is will offset losses from the drop in Bank of the Philippine Is' long position.The idea behind Snap Inc and Bank of the 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.| Bank of the Philippine Is vs. BOC Hong Kong | Bank of the Philippine Is vs. China Merchants Bank | Bank of the Philippine Is vs. BDO Unibank ADR | Bank of the Philippine Is vs. United Security Bancshares |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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