Correlation Between Bancolombia and Credicorp
Can any of the company-specific risk be diversified away by investing in both Bancolombia and Credicorp 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 Bancolombia and Credicorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bancolombia SA ADR and Credicorp, you can compare the effects of market volatilities on Bancolombia and Credicorp 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 Bancolombia with a short position of Credicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and Credicorp.
Diversification Opportunities for Bancolombia and Credicorp
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bancolombia and Credicorp is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp and Bancolombia 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 Bancolombia SA ADR are associated (or correlated) with Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of Bancolombia i.e., Bancolombia and Credicorp go up and down completely randomly.
Pair Corralation between Bancolombia and Credicorp
Considering the 90-day investment horizon Bancolombia is expected to generate 1.72 times less return on investment than Credicorp. In addition to that, Bancolombia is 1.04 times more volatile than Credicorp. It trades about 0.07 of its total potential returns per unit of risk. Credicorp is currently generating about 0.13 per unit of volatility. If you would invest 12,301 in Credicorp on August 24, 2024 and sell it today you would earn a total of 7,427 from holding Credicorp or generate 60.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bancolombia SA ADR vs. Credicorp
Performance |
| Timeline |
| Bancolombia SA ADR |
| Credicorp |
Bancolombia and Credicorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancolombia and Credicorp
The main advantage of trading using opposite Bancolombia and Credicorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia position performs unexpectedly, Credicorp 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 Credicorp will offset losses from the drop in Credicorp's long position.| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
| Credicorp vs. Banco Bradesco SA | Credicorp vs. Itau Unibanco Banco | Credicorp vs. Banco Santander Brasil | Credicorp vs. Western Alliance Bancorporation |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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