Correlation Between Bank of the and Aboitiz Equity

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

By analyzing existing cross correlation between Bank of the and Aboitiz Equity Ventures, you can compare the effects of market volatilities on Bank of the and Aboitiz Equity 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 Bank of the with a short position of Aboitiz Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and Aboitiz Equity.

Diversification Opportunities for Bank of the and Aboitiz Equity

0.53

Correlation Coefficient

Bank of the  Aboitiz Equity

Very weak diversification

The 3 months correlation between Bank and Aboitiz is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and Aboitiz Equity Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aboitiz Equity Ventures and Bank of the 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 Bank of the are associated (or correlated) with Aboitiz Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aboitiz Equity Ventures has no effect on the direction of Bank of the i.e., Bank of the and Aboitiz Equity go up and down completely randomly.

Pair Corralation between Bank of the and Aboitiz Equity

Assuming the 90 days trading horizon Bank of the is expected to under-perform the Aboitiz Equity. In addition to that, Bank of the is 1.06 times more volatile than Aboitiz Equity Ventures. It trades about -0.2 of its total potential returns per unit of risk. Aboitiz Equity Ventures is currently generating about -0.06 per unit of volatility. If you would invest  3,385  in Aboitiz Equity Ventures on September 23, 2024 and sell it today you would lose (85.00) from holding Aboitiz Equity Ventures or give up 2.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bank of the  vs.  Aboitiz Equity Ventures

Bank of the

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bank of the and Aboitiz Equity

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

The idea behind Bank of the and Aboitiz Equity Ventures 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.