Correlation Between CF Bankshares and Grupo Financiero

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

By analyzing existing cross correlation between CF Bankshares and Grupo Financiero Galicia, you can compare the effects of market volatilities on CF Bankshares and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Bankshares and Grupo Financiero.

Diversification Opportunities for CF Bankshares and Grupo Financiero

-0.41

Correlation Coefficient

CF Bankshares  Grupo Financiero

Very good diversification

The 3 months correlation between CFBK and Grupo is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of CF Bankshares i.e., CF Bankshares and Grupo Financiero go up and down completely randomly.

Pair Corralation between CF Bankshares and Grupo Financiero

Given the investment horizon of 90 days CF Bankshares is expected to generate 0.42 times more return on investment than Grupo Financiero. However, CF Bankshares is 2.37 times less risky than Grupo Financiero. It trades about -0.39 of its potential returns per unit of risk. Grupo Financiero Galicia is currently generating about -0.23 per unit of risk. If you would invest  2,451  in CF Bankshares on December 10, 2024 and sell it today you would lose (244.00) from holding CF Bankshares or give up 9.96% of portfolio value over 90 days.

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

CF Bankshares  vs.  Grupo Financiero Galicia

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 unsteady performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Grupo Financiero Galicia

Risk-Adjusted Performance

Weak

Over the last 90 days Grupo Financiero Galicia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Grupo Financiero is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CF Bankshares and Grupo Financiero

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

The idea behind CF Bankshares and Grupo Financiero Galicia 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.