Correlation Between Bank of the and Globe Telecom

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

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

Diversification Opportunities for Bank of the and Globe Telecom

0.33

Correlation Coefficient

Bank of the  Globe Telecom

Weak diversification

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

Pair Corralation between Bank of the and Globe Telecom

Assuming the 90 days trading horizon Bank of the is expected to generate 1.32 times more return on investment than Globe Telecom. However, Bank of the is 1.32 times more volatile than Globe Telecom. It trades about -0.04 of its potential returns per unit of risk. Globe Telecom is currently generating about -0.22 per unit of risk. If you would invest  13,299  in Bank of the on April 22, 2025 and sell it today you would lose (709.00) from holding Bank of the or give up 5.33% of portfolio value over 90 days.

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

Bank of the  vs.  Globe Telecom

Bank of the

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bank of the is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Globe Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globe Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bank of the and Globe Telecom

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

The idea behind Bank of the and Globe Telecom 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .