Correlation Between Banco De and SPBVL Peru

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Can any of the company-specific risk be diversified away by investing in both Banco De and SPBVL Peru 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 Banco De and SPBVL Peru into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco de Credito and SPBVL Peru General, you can compare the effects of market volatilities on Banco De and SPBVL Peru 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 Banco De with a short position of SPBVL Peru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and SPBVL Peru.

Diversification Opportunities for Banco De and SPBVL Peru

0.67

Correlation Coefficient

Banco De

SPBVL Peru

Poor diversification

The 3 months correlation between Banco and SPBVL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Credito and SPBVL Peru General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPBVL Peru General and Banco De 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 Banco de Credito are associated (or correlated) with SPBVL Peru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPBVL Peru General has no effect on the direction of Banco De i.e., Banco De and SPBVL Peru go up and down completely randomly.

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Pair Corralation between Banco De and SPBVL Peru

Assuming the 90 days trading horizon Banco de Credito is expected to generate 4.06 times more return on investment than SPBVL Peru. However, Banco De is 4.06 times more volatile than SPBVL Peru General. It trades about 0.14 of its potential returns per unit of risk. SPBVL Peru General is currently generating about -0.29 per unit of risk. If you would invest 378.00 in Banco de Credito on September 2, 2024 and sell it today you would earn a total of 22.00 from holding Banco de Credito or generate 5.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Banco de Credito vs. SPBVL Peru General

Performance

Timeline

Banco De and SPBVL Peru Volatility Contrast

Predicted Return Density

Returns

Banco de Credito

Pair trading matchups for Banco De

	Banco De vs. Nexa Resources Peru
	Banco De vs. Union Andina de
	Banco De vs. Corporacion Aceros Arequipa
	Banco De vs. ENGIE Energia Peru

SPBVL Peru General

Pair trading matchups for SPBVL Peru

	SPBVL Peru vs. Southern Copper Corp
	SPBVL Peru vs. InRetail Peru Corp
	SPBVL Peru vs. Banco de Credito

Pair Trading with Banco De and SPBVL Peru

The main advantage of trading using opposite Banco De and SPBVL Peru positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, SPBVL Peru 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 SPBVL Peru will offset losses from the drop in SPBVL Peru's long position.

	Banco De vs. Nexa Resources Peru
	Banco De vs. Union Andina de
	Banco De vs. Corporacion Aceros Arequipa
	Banco De vs. ENGIE Energia Peru

The idea behind Banco de Credito and SPBVL Peru General pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

	SPBVL Peru vs. Southern Copper Corp
	SPBVL Peru vs. InRetail Peru Corp
	SPBVL Peru vs. Banco de Credito

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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