Correlation Between Intercorp Financial and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both Intercorp Financial and Finward Bancorp 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 Intercorp Financial and Finward Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercorp Financial Services and Finward Bancorp, you can compare the effects of market volatilities on Intercorp Financial and Finward Bancorp 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 Intercorp Financial with a short position of Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercorp Financial and Finward Bancorp.
Diversification Opportunities for Intercorp Financial and Finward Bancorp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intercorp and Finward is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Intercorp Financial Services and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and Intercorp 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 Intercorp Financial Services are associated (or correlated) with Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Intercorp Financial i.e., Intercorp Financial and Finward Bancorp go up and down completely randomly.
Pair Corralation between Intercorp Financial and Finward Bancorp
Considering the 90-day investment horizon Intercorp Financial Services is expected to generate 1.25 times more return on investment than Finward Bancorp. However, Intercorp Financial is 1.25 times more volatile than Finward Bancorp. It trades about 0.19 of its potential returns per unit of risk. Finward Bancorp is currently generating about -0.08 per unit of risk. If you would invest 2,695 in Intercorp Financial Services on September 4, 2024 and sell it today you would earn a total of 124.00 from holding Intercorp Financial Services or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intercorp Financial Services vs. Finward Bancorp
Performance |
| Timeline |
| Intercorp Financial |
| Finward Bancorp |
Intercorp Financial and Finward Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intercorp Financial and Finward Bancorp
The main advantage of trading using opposite Intercorp Financial and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercorp Financial position performs unexpectedly, Finward Bancorp 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 Finward Bancorp will offset losses from the drop in Finward Bancorp's long position.| Intercorp Financial vs. International Bancshares | Intercorp Financial vs. Finward Bancorp | Intercorp Financial vs. Aquagold International | Intercorp Financial vs. Thrivent High Yield |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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