Correlation Between Banco De and Metrogas
Can any of the company-specific risk be diversified away by investing in both Banco De and Metrogas 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 Banco De and Metrogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco de Valores and Metrogas SA, you can compare the effects of market volatilities on Banco De and Metrogas 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 Banco De with a short position of Metrogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Metrogas.
Diversification Opportunities for Banco De and Metrogas
Very poor diversification
The 3 months correlation between Banco and Metrogas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Valores and Metrogas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrogas SA and Banco De 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 Banco de Valores are associated (or correlated) with Metrogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrogas SA has no effect on the direction of Banco De i.e., Banco De and Metrogas go up and down completely randomly.
Pair Corralation between Banco De and Metrogas
Assuming the 90 days trading horizon Banco de Valores is expected to generate 0.37 times more return on investment than Metrogas. However, Banco de Valores is 2.7 times less risky than Metrogas. It trades about 0.27 of its potential returns per unit of risk. Metrogas SA is currently generating about -0.17 per unit of risk. If you would invest 42,000 in Banco de Valores on October 20, 2024 and sell it today you would earn a total of 2,900 from holding Banco de Valores or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco de Valores vs. Metrogas SA
Performance |
| Timeline |
| Banco de Valores |
| Metrogas SA |
Banco De and Metrogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and Metrogas
The main advantage of trading using opposite Banco De and Metrogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, Metrogas 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 Metrogas will offset losses from the drop in Metrogas' long position.| Banco De vs. Matba Rofex SA | Banco De vs. Compania de Transporte | Banco De vs. American Express Co | Banco De vs. Transportadora de Gas |
| Metrogas vs. Compania de Transporte | Metrogas vs. Ledesma SAAI | Metrogas vs. American Express Co | Metrogas vs. Telecom Argentina |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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