Correlation Between Banco De and Scotiabank Peru

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

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

Diversification Opportunities for Banco De and Scotiabank Peru

0.0

Correlation Coefficient

Banco De  Scotiabank Peru

Pay attention - limited upside

The 3 months correlation between Banco and Scotiabank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Credito and Scotiabank Peru SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotiabank Peru SAA and Banco De 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 Banco de Credito are associated (or correlated) with Scotiabank Peru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotiabank Peru SAA has no effect on the direction of Banco De i.e., Banco De and Scotiabank Peru go up and down completely randomly.

Pair Corralation between Banco De and Scotiabank Peru

Assuming the 90 days trading horizon Banco de Credito is expected to generate 0.19 times more return on investment than Scotiabank Peru. However, Banco de Credito is 5.29 times less risky than Scotiabank Peru. It trades about -0.18 of its potential returns per unit of risk. Scotiabank Peru SAA is currently generating about -0.04 per unit of risk. If you would invest  405.00  in Banco de Credito on October 24, 2024 and sell it today you would lose (15.00) from holding Banco de Credito or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Banco de Credito  vs.  Scotiabank Peru SAA

Banco de Credito

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Scotiabank Peru SAA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Banco De and Scotiabank Peru

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

The idea behind Banco de Credito and Scotiabank Peru SAA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.