Correlation Between Scotiabank Peru and Banco De

Can any of the company-specific risk be diversified away by investing in both Scotiabank Peru and Banco De 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 Scotiabank Peru and Banco De into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Scotiabank Peru SAA and Banco de Credito, you can compare the effects of market volatilities on Scotiabank Peru and Banco De 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 Scotiabank Peru with a short position of Banco De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotiabank Peru and Banco De.

Diversification Opportunities for Scotiabank Peru and Banco De

0.16

Correlation Coefficient

Scotiabank Peru  Banco De

Average diversification

The 3 months correlation between Scotiabank and Banco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Scotiabank Peru SAA and Banco de Credito in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco de Credito and Scotiabank Peru 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 Scotiabank Peru SAA are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco de Credito has no effect on the direction of Scotiabank Peru i.e., Scotiabank Peru and Banco De go up and down completely randomly.

Pair Corralation between Scotiabank Peru and Banco De

Assuming the 90 days trading horizon Scotiabank Peru SAA is expected to under-perform the Banco De. In addition to that, Scotiabank Peru is 1.99 times more volatile than Banco de Credito. It trades about -0.09 of its total potential returns per unit of risk. Banco de Credito is currently generating about 0.08 per unit of volatility. If you would invest  400.00  in Banco de Credito on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Banco de Credito or generate 5.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	28.57%
Values	Daily Returns

Scotiabank Peru SAA  vs.  Banco de Credito

Scotiabank Peru SAA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scotiabank Peru SAA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Banco de Credito

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Banco De is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Scotiabank Peru and Banco De

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

The idea behind Scotiabank Peru SAA and Banco de Credito 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..