Correlation Between Philippine Savings and SM Investments
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and SM Investments 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 Savings and SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine Savings Bank and SM Investments Corp, you can compare the effects of market volatilities on Philippine Savings and SM Investments 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 Savings with a short position of SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and SM Investments.
Diversification Opportunities for Philippine Savings and SM Investments
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Philippine and SM Investments is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and SM Investments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments Corp and Philippine Savings 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 Savings Bank are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments Corp has no effect on the direction of Philippine Savings i.e., Philippine Savings and SM Investments go up and down completely randomly.
Pair Corralation between Philippine Savings and SM Investments
Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 0.91 times more return on investment than SM Investments. However, Philippine Savings Bank is 1.09 times less risky than SM Investments. It trades about 0.09 of its potential returns per unit of risk. SM Investments Corp is currently generating about -0.06 per unit of risk. If you would invest 5,530 in Philippine Savings Bank on September 17, 2024 and sell it today you would earn a total of 520.00 from holding Philippine Savings Bank or generate 9.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Philippine Savings Bank vs. SM Investments Corp
Performance |
Timeline |
Philippine Savings Bank |
SM Investments Corp |
Philippine Savings and SM Investments Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Philippine Savings and SM Investments
The main advantage of trading using opposite Philippine Savings and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.Philippine Savings vs. BDO Unibank | Philippine Savings vs. Union Bank of | Philippine Savings vs. Philippine National Bank | Philippine Savings vs. Asia United Bank |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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