Correlation Between Rizal Commercial and COL Financial
Can any of the company-specific risk be diversified away by investing in both Rizal Commercial and COL Financial 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 Rizal Commercial and COL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rizal Commercial Banking and COL Financial Group, you can compare the effects of market volatilities on Rizal Commercial and COL Financial 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 Rizal Commercial with a short position of COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rizal Commercial and COL Financial.
Diversification Opportunities for Rizal Commercial and COL Financial
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rizal and COL is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rizal Commercial Banking and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group and Rizal Commercial 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 Rizal Commercial Banking are associated (or correlated) with COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of Rizal Commercial i.e., Rizal Commercial and COL Financial go up and down completely randomly.
Pair Corralation between Rizal Commercial and COL Financial
Assuming the 90 days trading horizon Rizal Commercial Banking is expected to generate 0.97 times more return on investment than COL Financial. However, Rizal Commercial Banking is 1.03 times less risky than COL Financial. It trades about 0.09 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.03 per unit of risk. If you would invest 2,480 in Rizal Commercial Banking on December 28, 2024 and sell it today you would earn a total of 245.00 from holding Rizal Commercial Banking or generate 9.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.0% |
Values | Daily Returns |
Rizal Commercial Banking vs. COL Financial Group
Performance |
Timeline |
Rizal Commercial Banking |
COL Financial Group |
Rizal Commercial and COL Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rizal Commercial and COL Financial
The main advantage of trading using opposite Rizal Commercial and COL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rizal Commercial position performs unexpectedly, COL Financial 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 COL Financial will offset losses from the drop in COL Financial's long position.Rizal Commercial vs. East West Banking | Rizal Commercial vs. Sun Life Financial | Rizal Commercial vs. Union Bank of | Rizal Commercial vs. National Reinsurance |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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