Correlation Between Grupo Financiero and BancFirst
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero and BancFirst 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 Grupo Financiero and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and BancFirst, you can compare the effects of market volatilities on Grupo Financiero and BancFirst 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 Grupo Financiero with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and BancFirst.
Diversification Opportunities for Grupo Financiero and BancFirst
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and BancFirst is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Grupo Financiero 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 Grupo Financiero Galicia are associated (or correlated) with BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and BancFirst go up and down completely randomly.
Pair Corralation between Grupo Financiero and BancFirst
Given the investment horizon of 90 days Grupo Financiero Galicia is expected to generate 1.03 times more return on investment than BancFirst. However, Grupo Financiero is 1.03 times more volatile than BancFirst. It trades about 0.24 of its potential returns per unit of risk. BancFirst is currently generating about 0.1 per unit of risk. If you would invest 4,663 in Grupo Financiero Galicia on September 20, 2024 and sell it today you would earn a total of 2,209 from holding Grupo Financiero Galicia or generate 47.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Grupo Financiero Galicia vs. BancFirst
Performance |
Timeline |
Grupo Financiero Galicia |
BancFirst |
Grupo Financiero and BancFirst Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grupo Financiero and BancFirst
The main advantage of trading using opposite Grupo Financiero and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero position performs unexpectedly, BancFirst 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 BancFirst will offset losses from the drop in BancFirst's long position.Grupo Financiero vs. CrossFirst Bankshares | Grupo Financiero vs. Banco Bradesco SA | Grupo Financiero vs. CF Bankshares | Grupo Financiero vs. Foreign Trade Bank |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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