Correlation Between Bank of the and BRNPB

Can any of the company-specific risk be diversified away by investing in both Bank of the and BRNPB 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 BRNPB 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 BRNPB, you can compare the effects of market volatilities on Bank of the and BRNPB 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 BRNPB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and BRNPB.

Diversification Opportunities for Bank of the and BRNPB

0.0

Correlation Coefficient

Bank of the  BRNPB

Pay attention - limited upside

The 3 months correlation between Bank and BRNPB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and BRNPB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRNPB 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 BRNPB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRNPB has no effect on the direction of Bank of the i.e., Bank of the and BRNPB go up and down completely randomly.

Pair Corralation between Bank of the and BRNPB

Assuming the 90 days trading horizon Bank of the is expected to generate 0.76 times more return on investment than BRNPB. However, Bank of the is 1.32 times less risky than BRNPB. It trades about 0.06 of its potential returns per unit of risk. BRNPB is currently generating about 0.01 per unit of risk. If you would invest  9,813  in Bank of the on October 8, 2024 and sell it today you would earn a total of  2,637  from holding Bank of the or generate 26.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	30.47%
Values	Daily Returns

Bank of the  vs.  BRNPB

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 weak 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.

BRNPB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRNPB has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BRNPB is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank of the and BRNPB

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

The idea behind Bank of the and BRNPB 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.