Correlation Between Swift Foods and Philippine National
Can any of the company-specific risk be diversified away by investing in both Swift Foods and Philippine National 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 Swift Foods and Philippine National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swift Foods and Philippine National Bank, you can compare the effects of market volatilities on Swift Foods and Philippine National 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 Swift Foods with a short position of Philippine National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swift Foods and Philippine National.
Diversification Opportunities for Swift Foods and Philippine National
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Swift and Philippine is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Swift Foods and Philippine National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine National Bank and Swift Foods 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 Swift Foods are associated (or correlated) with Philippine National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine National Bank has no effect on the direction of Swift Foods i.e., Swift Foods and Philippine National go up and down completely randomly.
Pair Corralation between Swift Foods and Philippine National
Assuming the 90 days trading horizon Swift Foods is expected to generate 5.68 times more return on investment than Philippine National. However, Swift Foods is 5.68 times more volatile than Philippine National Bank. It trades about 0.12 of its potential returns per unit of risk. Philippine National Bank is currently generating about -0.05 per unit of risk. If you would invest 5.00 in Swift Foods on September 24, 2024 and sell it today you would earn a total of 0.50 from holding Swift Foods or generate 10.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Swift Foods vs. Philippine National Bank
Performance |
Timeline |
Swift Foods |
Philippine National Bank |
Swift Foods and Philippine National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Swift Foods and Philippine National
The main advantage of trading using opposite Swift Foods and Philippine National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swift Foods position performs unexpectedly, Philippine National 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 Philippine National will offset losses from the drop in Philippine National's long position.Swift Foods vs. Century Pacific Food | Swift Foods vs. RFM Corp | Swift Foods vs. Axelum Resources Corp | Swift Foods vs. DDMP REIT |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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