Correlation Between Intercorp Financial and BancFirst

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Can any of the company-specific risk be diversified away by investing in both Intercorp Financial 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 Intercorp Financial and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercorp Financial Services and BancFirst, you can compare the effects of market volatilities on Intercorp Financial 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 Intercorp Financial with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercorp Financial and BancFirst.

Diversification Opportunities for Intercorp Financial and BancFirst

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Intercorp and BancFirst is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Intercorp Financial Services and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Intercorp Financial 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 Intercorp Financial Services 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 Intercorp Financial i.e., Intercorp Financial and BancFirst go up and down completely randomly.

Pair Corralation between Intercorp Financial and BancFirst

Considering the 90-day investment horizon Intercorp Financial Services is expected to generate 0.5 times more return on investment than BancFirst. However, Intercorp Financial Services is 1.99 times less risky than BancFirst. It trades about 0.21 of its potential returns per unit of risk. BancFirst is currently generating about 0.1 per unit of risk. If you would invest  2,451  in Intercorp Financial Services on September 20, 2024 and sell it today you would earn a total of  464.00  from holding Intercorp Financial Services or generate 18.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Intercorp Financial Services  vs.  BancFirst

 Performance 
       Timeline  
Intercorp Financial 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Intercorp Financial Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Intercorp Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.
BancFirst 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in BancFirst are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, BancFirst reported solid returns over the last few months and may actually be approaching a breakup point.

Intercorp Financial and BancFirst Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intercorp Financial and BancFirst

The main advantage of trading using opposite Intercorp Financial and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercorp Financial 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.
The idea behind Intercorp Financial Services and BancFirst 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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