Correlation Between CF Bankshares and Banco De

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

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

Diversification Opportunities for CF Bankshares and Banco De

-0.36

Correlation Coefficient

CF Bankshares  Banco De

Very good diversification

The 3 months correlation between CFBK and Banco is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and Banco De Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco De Chile and CF Bankshares 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 CF Bankshares are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco De Chile has no effect on the direction of CF Bankshares i.e., CF Bankshares and Banco De go up and down completely randomly.

Pair Corralation between CF Bankshares and Banco De

Given the investment horizon of 90 days CF Bankshares is expected to under-perform the Banco De. In addition to that, CF Bankshares is 1.64 times more volatile than Banco De Chile. It trades about -0.06 of its total potential returns per unit of risk. Banco De Chile is currently generating about 0.34 per unit of volatility. If you would invest  2,103  in Banco De Chile on December 27, 2024 and sell it today you would earn a total of  593.00  from holding Banco De Chile or generate 28.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

CF Bankshares  vs.  Banco De Chile

CF Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days CF Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Banco De Chile

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Banco De demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CF Bankshares and Banco De

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

The idea behind CF Bankshares and Banco De Chile 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.