Correlation Between Banco De and Spey Resources

Can any of the company-specific risk be diversified away by investing in both Banco De and Spey Resources 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 Spey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco De Chile and Spey Resources Corp, you can compare the effects of market volatilities on Banco De and Spey Resources 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 Spey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Spey Resources.

Diversification Opportunities for Banco De and Spey Resources

0.73

Correlation Coefficient

Banco De  Spey Resources

Poor diversification

The 3 months correlation between Banco and Spey is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Spey Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spey Resources Corp 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 Chile are associated (or correlated) with Spey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spey Resources Corp has no effect on the direction of Banco De i.e., Banco De and Spey Resources go up and down completely randomly.

Pair Corralation between Banco De and Spey Resources

Considering the 90-day investment horizon Banco De Chile is expected to generate 0.11 times more return on investment than Spey Resources. However, Banco De Chile is 8.72 times less risky than Spey Resources. It trades about 0.34 of its potential returns per unit of risk. Spey Resources Corp is currently generating about -0.06 per unit of risk. If you would invest  2,110  in Banco De Chile on December 26, 2024 and sell it today you would earn a total of  591.00  from holding Banco De Chile or generate 28.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	35.0%
Values	Daily Returns

Banco De Chile  vs.  Spey Resources Corp

Banco De Chile

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Banco De demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Spey Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spey Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Banco De and Spey Resources

The main advantage of trading using opposite Banco De and Spey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, Spey Resources 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 Spey Resources will offset losses from the drop in Spey Resources' long position.

The idea behind Banco De Chile and Spey Resources Corp 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.