Correlation Between Intercorp Financial and Raiffeisen Bank

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

Diversification Opportunities for Intercorp Financial and Raiffeisen Bank

-0.01

Correlation Coefficient

Intercorp Financial  Raiffeisen Bank

Good diversification

The 3 months correlation between Intercorp and Raiffeisen is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Intercorp Financial Services and Raiffeisen Bank International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiffeisen Bank Inte 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 Raiffeisen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiffeisen Bank Inte has no effect on the direction of Intercorp Financial i.e., Intercorp Financial and Raiffeisen Bank go up and down completely randomly.

Pair Corralation between Intercorp Financial and Raiffeisen Bank

Considering the 90-day investment horizon Intercorp Financial is expected to generate 1.47 times less return on investment than Raiffeisen Bank. But when comparing it to its historical volatility, Intercorp Financial Services is 2.11 times less risky than Raiffeisen Bank. It trades about 0.05 of its potential returns per unit of risk. Raiffeisen Bank International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Raiffeisen Bank International on September 24, 2024 and sell it today you would earn a total of  110.00  from holding Raiffeisen Bank International or generate 27.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.78%
Values	Daily Returns

Intercorp Financial Services  vs.  Raiffeisen Bank International

Intercorp Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intercorp Financial Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Intercorp Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Raiffeisen Bank Inte

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Raiffeisen Bank International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Raiffeisen Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intercorp Financial and Raiffeisen Bank

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

The idea behind Intercorp Financial Services and Raiffeisen Bank International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.