Correlation Between Popular and OFG Bancorp
Can any of the company-specific risk be diversified away by investing in both Popular and OFG Bancorp 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 Popular and OFG Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Popular and OFG Bancorp, you can compare the effects of market volatilities on Popular and OFG Bancorp 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 Popular with a short position of OFG Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Popular and OFG Bancorp.
Diversification Opportunities for Popular and OFG Bancorp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Popular and OFG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Popular and OFG Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFG Bancorp and Popular 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 Popular are associated (or correlated) with OFG Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFG Bancorp has no effect on the direction of Popular i.e., Popular and OFG Bancorp go up and down completely randomly.
Pair Corralation between Popular and OFG Bancorp
Given the investment horizon of 90 days Popular is expected to generate 1.16 times less return on investment than OFG Bancorp. But when comparing it to its historical volatility, Popular is 1.14 times less risky than OFG Bancorp. It trades about 0.22 of its potential returns per unit of risk. OFG Bancorp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,063 in OFG Bancorp on August 28, 2024 and sell it today you would earn a total of 609.00 from holding OFG Bancorp or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Popular vs. OFG Bancorp
Performance |
| Timeline |
| Popular |
| OFG Bancorp |
Popular and OFG Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Popular and OFG Bancorp
The main advantage of trading using opposite Popular and OFG Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Popular position performs unexpectedly, OFG Bancorp 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 OFG Bancorp will offset losses from the drop in OFG Bancorp's long position.| Popular vs. OFG Bancorp | Popular vs. The First Bancshares, | Popular vs. First Commonwealth Financial | Popular vs. First Bancorp |
| OFG Bancorp vs. Popular | OFG Bancorp vs. The First Bancshares, | OFG Bancorp vs. First Commonwealth Financial | OFG Bancorp vs. First Bancorp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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