Correlation Between BDO Unibank and PLDT
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and PLDT 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 PLDT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and PLDT Inc, you can compare the effects of market volatilities on BDO Unibank and PLDT 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 PLDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and PLDT.
Diversification Opportunities for BDO Unibank and PLDT
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BDO and PLDT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc 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 PLDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLDT Inc has no effect on the direction of BDO Unibank i.e., BDO Unibank and PLDT go up and down completely randomly.
Pair Corralation between BDO Unibank and PLDT
Assuming the 90 days trading horizon BDO Unibank is expected to generate 1.21 times more return on investment than PLDT. However, BDO Unibank is 1.21 times more volatile than PLDT Inc. It trades about -0.12 of its potential returns per unit of risk. PLDT Inc is currently generating about -0.21 per unit of risk. If you would invest 16,223 in BDO Unibank on September 23, 2024 and sell it today you would lose (1,763) from holding BDO Unibank or give up 10.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BDO Unibank vs. PLDT Inc
Performance |
Timeline |
BDO Unibank |
PLDT Inc |
BDO Unibank and PLDT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BDO Unibank and PLDT
The main advantage of trading using opposite BDO Unibank and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, PLDT 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 PLDT will offset losses from the drop in PLDT's long position.BDO Unibank vs. Metropolitan Bank Trust | BDO Unibank vs. Security Bank Corp | BDO Unibank vs. Union Bank of | BDO Unibank vs. Philippine National Bank |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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