Correlation Between Intercorp Financial and BancFirst
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Intercorp Financial Services vs. BancFirst
Performance |
Timeline |
Intercorp Financial |
BancFirst |
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.Intercorp Financial vs. Banco De Chile | Intercorp Financial vs. Bancolombia SA ADR | Intercorp Financial vs. Foreign Trade Bank | Intercorp Financial vs. BancFirst |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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