Correlation Between IDFC First and Yes Bank

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

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

Diversification Opportunities for IDFC First and Yes Bank

0.87

Correlation Coefficient

IDFC First  Yes Bank

Very poor diversification

The 3 months correlation between IDFC and Yes is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding IDFC First Bank and Yes Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yes Bank Limited and IDFC First 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 IDFC First Bank are associated (or correlated) with Yes Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yes Bank Limited has no effect on the direction of IDFC First i.e., IDFC First and Yes Bank go up and down completely randomly.

Pair Corralation between IDFC First and Yes Bank

Assuming the 90 days trading horizon IDFC First Bank is expected to under-perform the Yes Bank. In addition to that, IDFC First is 1.03 times more volatile than Yes Bank Limited. It trades about -0.1 of its total potential returns per unit of risk. Yes Bank Limited is currently generating about -0.1 per unit of volatility. If you would invest  1,954  in Yes Bank Limited on December 30, 2024 and sell it today you would lose (266.00) from holding Yes Bank Limited or give up 13.61% of portfolio value over 90 days.

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

IDFC First Bank  vs.  Yes Bank Limited

IDFC First Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDFC First Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Yes Bank Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yes Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators 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.

Pair Trading with IDFC First and Yes Bank

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

The idea behind IDFC First Bank and Yes Bank Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.