Correlation Between Intercorp Financial and HomeTrust Bancshares

Can any of the company-specific risk be diversified away by investing in both Intercorp Financial and HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares, you can compare the effects of market volatilities on Intercorp Financial and HomeTrust Bancshares 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 HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercorp Financial and HomeTrust Bancshares.

Diversification Opportunities for Intercorp Financial and HomeTrust Bancshares

0.52

Correlation Coefficient

Intercorp Financial  HomeTrust Bancshares

Very weak diversification

The 3 months correlation between Intercorp and HomeTrust is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Intercorp Financial Services and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares 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 HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of Intercorp Financial i.e., Intercorp Financial and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Intercorp Financial and HomeTrust Bancshares

Considering the 90-day investment horizon Intercorp Financial Services is expected to generate 0.83 times more return on investment than HomeTrust Bancshares. However, Intercorp Financial Services is 1.21 times less risky than HomeTrust Bancshares. It trades about 0.13 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about -0.35 per unit of risk. If you would invest  2,823  in Intercorp Financial Services on September 25, 2024 and sell it today you would earn a total of  95.00  from holding Intercorp Financial Services or generate 3.37% return on investment over 90 days.

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

Intercorp Financial Services  vs.  HomeTrust Bancshares

Intercorp Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intercorp Financial Services are ranked lower than 14 (%) 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.

HomeTrust Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Intercorp Financial and HomeTrust Bancshares

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

The idea behind Intercorp Financial Services and HomeTrust Bancshares 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.