Correlation Between Heritage Financial and Grupo Aval
Can any of the company-specific risk be diversified away by investing in both Heritage Financial and Grupo Aval 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 Heritage Financial and Grupo Aval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Financial and Grupo Aval, you can compare the effects of market volatilities on Heritage Financial and Grupo Aval 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 Heritage Financial with a short position of Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Financial and Grupo Aval.
Diversification Opportunities for Heritage Financial and Grupo Aval
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Heritage and Grupo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Financial and Grupo Aval in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval and Heritage Financial 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 Heritage Financial are associated (or correlated) with Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval has no effect on the direction of Heritage Financial i.e., Heritage Financial and Grupo Aval go up and down completely randomly.
Pair Corralation between Heritage Financial and Grupo Aval
Given the investment horizon of 90 days Heritage Financial is expected to generate 2.64 times more return on investment than Grupo Aval. However, Heritage Financial is 2.64 times more volatile than Grupo Aval. It trades about 0.23 of its potential returns per unit of risk. Grupo Aval is currently generating about 0.17 per unit of risk. If you would invest 2,275 in Heritage Financial on August 28, 2024 and sell it today you would earn a total of 403.00 from holding Heritage Financial or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Financial vs. Grupo Aval
Performance |
| Timeline |
| Heritage Financial |
| Grupo Aval |
Heritage Financial and Grupo Aval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Financial and Grupo Aval
The main advantage of trading using opposite Heritage Financial and Grupo Aval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Financial position performs unexpectedly, Grupo Aval 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 Grupo Aval will offset losses from the drop in Grupo Aval's long position.| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
| Grupo Aval vs. Banco De Chile | Grupo Aval vs. Banco Santander Chile | Grupo Aval vs. Credicorp | Grupo Aval vs. Foreign Trade Bank |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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