Correlation Between First Horizon and Bankinter

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

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

Diversification Opportunities for First Horizon and Bankinter

0.86

Correlation Coefficient

First Horizon  Bankinter

Very poor diversification

The 3 months correlation between First and Bankinter is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR and First Horizon 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 First Horizon are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of First Horizon i.e., First Horizon and Bankinter go up and down completely randomly.

Pair Corralation between First Horizon and Bankinter

Assuming the 90 days trading horizon First Horizon is expected to generate 15.9 times less return on investment than Bankinter. But when comparing it to its historical volatility, First Horizon is 10.42 times less risky than Bankinter. It trades about 0.19 of its potential returns per unit of risk. Bankinter SA ADR is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  792.00  in Bankinter SA ADR on December 30, 2024 and sell it today you would earn a total of  342.00  from holding Bankinter SA ADR or generate 43.18% return on investment over 90 days.

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

First Horizon  vs.  Bankinter SA ADR

First Horizon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Horizon are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Horizon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bankinter SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bankinter SA ADR are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Bankinter showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Horizon and Bankinter

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

The idea behind First Horizon and Bankinter SA ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.