Correlation Between Swedbank and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both Swedbank 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 Swedbank and BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and BDO Unibank ADR, you can compare the effects of market volatilities on Swedbank 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 Swedbank with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and BDO Unibank.
Diversification Opportunities for Swedbank and BDO Unibank
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swedbank and BDO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB 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 Swedbank 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 Swedbank AB 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 Swedbank i.e., Swedbank and BDO Unibank go up and down completely randomly.
Pair Corralation between Swedbank and BDO Unibank
Assuming the 90 days horizon Swedbank AB is expected to generate 0.56 times more return on investment than BDO Unibank. However, Swedbank AB is 1.77 times less risky than BDO Unibank. It trades about -0.2 of its potential returns per unit of risk. BDO Unibank ADR is currently generating about -0.18 per unit of risk. If you would invest 2,054 in Swedbank AB on August 27, 2024 and sell it today you would lose (124.00) from holding Swedbank AB or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. BDO Unibank ADR
Performance |
| Timeline |
| Swedbank AB |
| BDO Unibank ADR |
Swedbank and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and BDO Unibank
The main advantage of trading using opposite Swedbank and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank 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.| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount Bank |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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