Correlation Between BDO Unibank and Filinvest REIT

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

By analyzing existing cross correlation between BDO Unibank and Filinvest REIT Corp, you can compare the effects of market volatilities on BDO Unibank and Filinvest REIT 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 BDO Unibank with a short position of Filinvest REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Filinvest REIT.

Diversification Opportunities for BDO Unibank and Filinvest REIT

0.33

Correlation Coefficient

BDO Unibank  Filinvest REIT

Weak diversification

The 3 months correlation between BDO and Filinvest is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Filinvest REIT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filinvest REIT Corp and BDO Unibank 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 BDO Unibank are associated (or correlated) with Filinvest REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filinvest REIT Corp has no effect on the direction of BDO Unibank i.e., BDO Unibank and Filinvest REIT go up and down completely randomly.

Pair Corralation between BDO Unibank and Filinvest REIT

Assuming the 90 days trading horizon BDO Unibank is expected to under-perform the Filinvest REIT. In addition to that, BDO Unibank is 2.8 times more volatile than Filinvest REIT Corp. It trades about -0.09 of its total potential returns per unit of risk. Filinvest REIT Corp is currently generating about -0.18 per unit of volatility. If you would invest  303.00  in Filinvest REIT Corp on September 26, 2024 and sell it today you would lose (17.00) from holding Filinvest REIT Corp or give up 5.61% of portfolio value over 90 days.

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

BDO Unibank  vs.  Filinvest REIT Corp

BDO Unibank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BDO Unibank 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.

Filinvest REIT Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Filinvest REIT Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Filinvest REIT 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 BDO Unibank and Filinvest REIT

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

The idea behind BDO Unibank and Filinvest REIT Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.