Correlation Between BancFirst and Intercorp Financial
Can any of the company-specific risk be diversified away by investing in both BancFirst and Intercorp Financial 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 BancFirst and Intercorp Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BancFirst and Intercorp Financial Services, you can compare the effects of market volatilities on BancFirst and Intercorp Financial 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 BancFirst with a short position of Intercorp Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BancFirst and Intercorp Financial.
Diversification Opportunities for BancFirst and Intercorp Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BancFirst and Intercorp is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and Intercorp Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercorp Financial and BancFirst 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 BancFirst are associated (or correlated) with Intercorp Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercorp Financial has no effect on the direction of BancFirst i.e., BancFirst and Intercorp Financial go up and down completely randomly.
Pair Corralation between BancFirst and Intercorp Financial
Given the investment horizon of 90 days BancFirst is expected to generate 3.39 times more return on investment than Intercorp Financial. However, BancFirst is 3.39 times more volatile than Intercorp Financial Services. It trades about 0.18 of its potential returns per unit of risk. Intercorp Financial Services is currently generating about 0.1 per unit of risk. If you would invest 11,090 in BancFirst on August 31, 2024 and sell it today you would earn a total of 1,646 from holding BancFirst or generate 14.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BancFirst vs. Intercorp Financial Services
Performance |
| Timeline |
| BancFirst |
| Intercorp Financial |
BancFirst and Intercorp Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BancFirst and Intercorp Financial
The main advantage of trading using opposite BancFirst and Intercorp Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BancFirst position performs unexpectedly, Intercorp Financial 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 Intercorp Financial will offset losses from the drop in Intercorp Financial's long position.| BancFirst vs. Glacier Bancorp | BancFirst vs. BOK Financial | BancFirst vs. First Financial Bancorp | BancFirst vs. First Bancorp |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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