Correlation Between Philippine National and Wilcon Depot

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

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

Diversification Opportunities for Philippine National and Wilcon Depot

-0.74

Correlation Coefficient

Philippine National  Wilcon Depot

Pay attention - limited upside

The 3 months correlation between Philippine and Wilcon is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Philippine National Bank and Wilcon Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilcon Depot and Philippine National 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 Philippine National Bank are associated (or correlated) with Wilcon Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilcon Depot has no effect on the direction of Philippine National i.e., Philippine National and Wilcon Depot go up and down completely randomly.

Pair Corralation between Philippine National and Wilcon Depot

Assuming the 90 days trading horizon Philippine National Bank is expected to generate 0.43 times more return on investment than Wilcon Depot. However, Philippine National Bank is 2.33 times less risky than Wilcon Depot. It trades about 0.28 of its potential returns per unit of risk. Wilcon Depot is currently generating about -0.24 per unit of risk. If you would invest  2,615  in Philippine National Bank on November 28, 2024 and sell it today you would earn a total of  625.00  from holding Philippine National Bank or generate 23.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Philippine National Bank  vs.  Wilcon Depot

Philippine National Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine National Bank are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Philippine National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Wilcon Depot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilcon Depot has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Philippine National and Wilcon Depot

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

The idea behind Philippine National Bank and Wilcon Depot 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.