Correlation Between First Mid and Credicorp
Can any of the company-specific risk be diversified away by investing in both First Mid 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 First Mid and Credicorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mid Illinois and Credicorp, you can compare the effects of market volatilities on First Mid 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 First Mid with a short position of Credicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mid and Credicorp.
Diversification Opportunities for First Mid and Credicorp
Poor diversification
The 3 months correlation between First and Credicorp is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Mid Illinois and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp and First Mid 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 First Mid Illinois 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 First Mid i.e., First Mid and Credicorp go up and down completely randomly.
Pair Corralation between First Mid and Credicorp
Given the investment horizon of 90 days First Mid Illinois is expected to generate 1.09 times more return on investment than Credicorp. However, First Mid is 1.09 times more volatile than Credicorp. It trades about 0.15 of its potential returns per unit of risk. Credicorp is currently generating about -0.02 per unit of risk. If you would invest 3,619 in First Mid Illinois on November 4, 2024 and sell it today you would earn a total of 174.00 from holding First Mid Illinois or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mid Illinois vs. Credicorp
Performance |
| Timeline |
| First Mid Illinois |
| Credicorp |
First Mid and Credicorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mid and Credicorp
The main advantage of trading using opposite First Mid and Credicorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mid 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.| First Mid vs. US Bancorp | First Mid vs. Truist Financial Corp | First Mid vs. KeyCorp | First Mid vs. Citizens Financial Group, |
| Credicorp vs. Heritage Financial | Credicorp vs. Home Federal Bancorp | Credicorp vs. Magyar Bancorp | Credicorp vs. National Bankshares |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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