Correlation Between Bancolombia and Intercorp Financial
Can any of the company-specific risk be diversified away by investing in both Bancolombia 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 Bancolombia and Intercorp Financial 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 Intercorp Financial Services, you can compare the effects of market volatilities on Bancolombia 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 Bancolombia with a short position of Intercorp Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and Intercorp Financial.
Diversification Opportunities for Bancolombia and Intercorp Financial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bancolombia and Intercorp is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Intercorp Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercorp Financial 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 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 Bancolombia i.e., Bancolombia and Intercorp Financial go up and down completely randomly.
Pair Corralation between Bancolombia and Intercorp Financial
Considering the 90-day investment horizon Bancolombia SA ADR is expected to generate 1.49 times more return on investment than Intercorp Financial. However, Bancolombia is 1.49 times more volatile than Intercorp Financial Services. It trades about 0.16 of its potential returns per unit of risk. Intercorp Financial Services is currently generating about 0.14 per unit of risk. If you would invest 3,160 in Bancolombia SA ADR on August 27, 2024 and sell it today you would earn a total of 173.00 from holding Bancolombia SA ADR or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bancolombia SA ADR vs. Intercorp Financial Services
Performance |
| Timeline |
| Bancolombia SA ADR |
| Intercorp Financial |
Bancolombia and Intercorp Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancolombia and Intercorp Financial
The main advantage of trading using opposite Bancolombia and Intercorp Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia 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.| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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