Correlation Between BDO Unibank and First Philippine
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and First Philippine 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 BDO Unibank and First Philippine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and First Philippine Holdings, you can compare the effects of market volatilities on BDO Unibank and First Philippine 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 BDO Unibank with a short position of First Philippine. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and First Philippine.
Diversification Opportunities for BDO Unibank and First Philippine
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BDO and First is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and First Philippine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Philippine Holdings and BDO Unibank 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 BDO Unibank are associated (or correlated) with First Philippine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Philippine Holdings has no effect on the direction of BDO Unibank i.e., BDO Unibank and First Philippine go up and down completely randomly.
Pair Corralation between BDO Unibank and First Philippine
Assuming the 90 days trading horizon BDO Unibank is expected to generate 1.84 times more return on investment than First Philippine. However, BDO Unibank is 1.84 times more volatile than First Philippine Holdings. It trades about 0.04 of its potential returns per unit of risk. First Philippine Holdings is currently generating about 0.01 per unit of risk. If you would invest 11,919 in BDO Unibank on December 4, 2024 and sell it today you would earn a total of 3,181 from holding BDO Unibank or generate 26.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.38% |
Values | Daily Returns |
BDO Unibank vs. First Philippine Holdings
Performance |
Timeline |
BDO Unibank |
First Philippine Holdings |
BDO Unibank and First Philippine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BDO Unibank and First Philippine
The main advantage of trading using opposite BDO Unibank and First Philippine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, First Philippine 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 First Philippine will offset losses from the drop in First Philippine's long position.BDO Unibank vs. Allhome Corp | BDO Unibank vs. Megawide Construction Corp | BDO Unibank vs. Semirara Mining Corp | BDO Unibank vs. Transpacific Broadband Group |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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