Correlation Between Eurobank Ergasias and Bank of the Philippine Is

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

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

Diversification Opportunities for Eurobank Ergasias and Bank of the Philippine Is

-0.14

Correlation Coefficient

Eurobank Ergasias  Bank of the Philippine Is

Good diversification

The 3 months correlation between Eurobank and Bank is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias Services and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the Philippine Is and Eurobank Ergasias 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 Eurobank Ergasias Services are associated (or correlated) with Bank of the Philippine Is. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the Philippine Is has no effect on the direction of Eurobank Ergasias i.e., Eurobank Ergasias and Bank of the Philippine Is go up and down completely randomly.

Pair Corralation between Eurobank Ergasias and Bank of the Philippine Is

Assuming the 90 days horizon Eurobank Ergasias Services is expected to generate 0.95 times more return on investment than Bank of the Philippine Is. However, Eurobank Ergasias Services is 1.05 times less risky than Bank of the Philippine Is. It trades about 0.09 of its potential returns per unit of risk. Bank of the is currently generating about 0.03 per unit of risk. If you would invest  224.00  in Eurobank Ergasias Services on December 29, 2024 and sell it today you would earn a total of  22.00  from holding Eurobank Ergasias Services or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.48%
Values	Daily Returns

Eurobank Ergasias Services  vs.  Bank of the

Eurobank Ergasias

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Eurobank Ergasias reported solid returns over the last few months and may actually be approaching a breakup point.

Bank of the Philippine Is

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of the are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Bank of the Philippine Is is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eurobank Ergasias and Bank of the Philippine Is

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

The idea behind Eurobank Ergasias Services and Bank of the 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 Commodity Directory module to find actively traded commodities issued by global exchanges.