Correlation Between Union Bank and Bank of the
Can any of the company-specific risk be diversified away by investing in both Union Bank and Bank of the 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 Union Bank and Bank of the into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Bank of and Bank of the, you can compare the effects of market volatilities on Union Bank and Bank of the 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 Union Bank with a short position of Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Bank of the.
Diversification Opportunities for Union Bank and Bank of the
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Bank is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and Union 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 Union Bank of are associated (or correlated) with Bank of the. 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 has no effect on the direction of Union Bank i.e., Union Bank and Bank of the go up and down completely randomly.
Pair Corralation between Union Bank and Bank of the
Assuming the 90 days trading horizon Union Bank is expected to generate 2.63 times less return on investment than Bank of the. But when comparing it to its historical volatility, Union Bank of is 1.04 times less risky than Bank of the. It trades about 0.01 of its potential returns per unit of risk. Bank of the is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12,110 in Bank of the on November 2, 2024 and sell it today you would earn a total of 340.00 from holding Bank of the or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bank of vs. Bank of the
Performance |
| Timeline |
| Union Bank |
| Bank of the |
Union Bank and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and Bank of the
The main advantage of trading using opposite Union Bank and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank position performs unexpectedly, Bank of the 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 will offset losses from the drop in Bank of the's long position.| Union Bank vs. Metro Retail Stores | Union Bank vs. SM Investments Corp | Union Bank vs. Top Frontier Investment | Union Bank vs. Cebu Air Preferred |
| Bank of the vs. Allhome Corp | Bank of the vs. Atlas Consolidated Mining | Bank of the vs. Philex Mining Corp | Bank of the vs. Apex Mining Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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