Correlation Between Foreign Trade and Intercorp Financial
Can any of the company-specific risk be diversified away by investing in both Foreign Trade 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 Foreign Trade and Intercorp Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Trade Bank and Intercorp Financial Services, you can compare the effects of market volatilities on Foreign Trade 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 Foreign Trade with a short position of Intercorp Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Trade and Intercorp Financial.
Diversification Opportunities for Foreign Trade and Intercorp Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foreign and Intercorp is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Bank and Intercorp Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercorp Financial and Foreign Trade 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 Foreign Trade Bank 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 Foreign Trade i.e., Foreign Trade and Intercorp Financial go up and down completely randomly.
Pair Corralation between Foreign Trade and Intercorp Financial
Considering the 90-day investment horizon Foreign Trade Bank is expected to generate 0.95 times more return on investment than Intercorp Financial. However, Foreign Trade Bank is 1.05 times less risky than Intercorp Financial. It trades about 0.12 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 2,324 in Foreign Trade Bank on November 9, 2024 and sell it today you would earn a total of 1,473 from holding Foreign Trade Bank or generate 63.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Trade Bank vs. Intercorp Financial Services
Performance |
| Timeline |
| Foreign Trade Bank |
| Intercorp Financial |
Foreign Trade and Intercorp Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Trade and Intercorp Financial
The main advantage of trading using opposite Foreign Trade and Intercorp Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Trade 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.| Foreign Trade vs. Banco Santander Chile | Foreign Trade vs. Bancolombia SA ADR | Foreign Trade vs. Banco Bradesco SA | Foreign Trade vs. Credicorp |
| Intercorp Financial vs. Banco De Chile | Intercorp Financial vs. Bancolombia SA ADR | Intercorp Financial vs. Foreign Trade Bank | Intercorp Financial vs. BancFirst |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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