Correlation Between Prosperity Bancshares and Grupo Financiero
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Grupo Financiero 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 Prosperity Bancshares and Grupo Financiero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Grupo Financiero Galicia, you can compare the effects of market volatilities on Prosperity Bancshares and Grupo Financiero 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 Prosperity Bancshares with a short position of Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Grupo Financiero.
Diversification Opportunities for Prosperity Bancshares and Grupo Financiero
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prosperity and Grupo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Grupo Financiero go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Grupo Financiero
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 8.0 times less return on investment than Grupo Financiero. But when comparing it to its historical volatility, Prosperity Bancshares is 2.05 times less risky than Grupo Financiero. It trades about 0.04 of its potential returns per unit of risk. Grupo Financiero Galicia is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 653.00 in Grupo Financiero Galicia on August 27, 2024 and sell it today you would earn a total of 4,895 from holding Grupo Financiero Galicia or generate 749.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Grupo Financiero Galicia
Performance |
| Timeline |
| Prosperity Bancshares |
| Grupo Financiero Galicia |
Prosperity Bancshares and Grupo Financiero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Grupo Financiero
The main advantage of trading using opposite Prosperity Bancshares and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, Grupo Financiero 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 Financiero will offset losses from the drop in Grupo Financiero's long position.| Prosperity Bancshares vs. Fifth Third Bancorp | Prosperity Bancshares vs. Zions Bancorporation | Prosperity Bancshares vs. Huntington Bancshares Incorporated | Prosperity Bancshares vs. PNC Financial Services |
| Grupo Financiero vs. Grupo Supervielle SA | Grupo Financiero vs. BBVA Banco Frances | Grupo Financiero vs. Itau Unibanco Banco | Grupo Financiero vs. Banco Bradesco SA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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