Correlation Between Grupo Financiero and Banco De

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Can any of the company-specific risk be diversified away by investing in both Grupo Financiero and Banco De 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 Grupo Financiero and Banco De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and Banco De Chile, you can compare the effects of market volatilities on Grupo Financiero and Banco De 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 Grupo Financiero with a short position of Banco De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Banco De.

Diversification Opportunities for Grupo Financiero and Banco De

GrupoBancoDiversified AwayGrupoBancoDiversified Away100%
-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Grupo and Banco is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Banco De Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco De Chile and Grupo Financiero 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 Grupo Financiero Galicia are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco De Chile has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Banco De go up and down completely randomly.

Pair Corralation between Grupo Financiero and Banco De

Given the investment horizon of 90 days Grupo Financiero Galicia is expected to under-perform the Banco De. In addition to that, Grupo Financiero is 2.74 times more volatile than Banco De Chile. It trades about -0.33 of its total potential returns per unit of risk. Banco De Chile is currently generating about 0.35 per unit of volatility. If you would invest  2,424  in Banco De Chile on November 30, 2024 and sell it today you would earn a total of  196.00  from holding Banco De Chile or generate 8.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Grupo Financiero Galicia  vs.  Banco De Chile

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510152025
JavaScript chart by amCharts 3.21.15GGAL BCH
       Timeline  
Grupo Financiero Galicia 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Grupo Financiero Galicia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Grupo Financiero is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb55606570
Banco De Chile 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Banco De demonstrated solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb222324252627

Grupo Financiero and Banco De Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.86-8.19-5.52-2.85-0.182.495.167.8310.513.17 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15GGAL BCH
       Returns  

Pair Trading with Grupo Financiero and Banco De

The main advantage of trading using opposite Grupo Financiero and Banco De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero position performs unexpectedly, Banco De 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 Banco De will offset losses from the drop in Banco De's long position.
The idea behind Grupo Financiero Galicia and Banco De Chile 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.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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