Correlation Between BancFirst and Intercorp Financial

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

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

Diversification Opportunities for BancFirst and Intercorp Financial

-0.4

Correlation Coefficient

BancFirst  Intercorp Financial

Very good diversification

The 3 months correlation between BancFirst and Intercorp is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and Intercorp Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercorp Financial and BancFirst 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 BancFirst are associated (or correlated) with Intercorp Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercorp Financial has no effect on the direction of BancFirst i.e., BancFirst and Intercorp Financial go up and down completely randomly.

Pair Corralation between BancFirst and Intercorp Financial

Given the investment horizon of 90 days BancFirst is expected to under-perform the Intercorp Financial. In addition to that, BancFirst is 1.14 times more volatile than Intercorp Financial Services. It trades about -0.08 of its total potential returns per unit of risk. Intercorp Financial Services is currently generating about 0.18 per unit of volatility. If you would invest  2,915  in Intercorp Financial Services on December 30, 2024 and sell it today you would earn a total of  435.00  from holding Intercorp Financial Services or generate 14.92% return on investment over 90 days.

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

BancFirst  vs.  Intercorp Financial Services

BancFirst

Risk-Adjusted Performance

Very Weak

Over the last 90 days BancFirst has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Intercorp Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intercorp Financial Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Intercorp Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BancFirst and Intercorp Financial

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

The idea behind BancFirst and Intercorp Financial Services 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.