Correlation Between US Bancorp and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both US Bancorp 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 US Bancorp and BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and BDO Unibank ADR, you can compare the effects of market volatilities on US Bancorp 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 US Bancorp with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and BDO Unibank.
Diversification Opportunities for US Bancorp and BDO Unibank
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USB-PH and BDO is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp 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 US Bancorp 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 US Bancorp 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 US Bancorp i.e., US Bancorp and BDO Unibank go up and down completely randomly.
Pair Corralation between US Bancorp and BDO Unibank
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.18 times more return on investment than BDO Unibank. However, US Bancorp is 5.71 times less risky than BDO Unibank. It trades about 0.13 of its potential returns per unit of risk. BDO Unibank ADR is currently generating about -0.14 per unit of risk. If you would invest 2,198 in US Bancorp on August 24, 2024 and sell it today you would earn a total of 27.00 from holding US Bancorp or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Bancorp vs. BDO Unibank ADR
Performance |
| Timeline |
| US Bancorp |
| BDO Unibank ADR |
US Bancorp and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and BDO Unibank
The main advantage of trading using opposite US Bancorp and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp 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.| US Bancorp vs. US Bancorp PERP | US Bancorp vs. KeyCorp | US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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