Correlation Between Woori Financial and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Woori Financial and CF Bankshares 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 Woori Financial and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Financial Group and CF Bankshares, you can compare the effects of market volatilities on Woori Financial and CF Bankshares 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 Woori Financial with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and CF Bankshares.
Diversification Opportunities for Woori Financial and CF Bankshares
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Woori and CFBK is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and Woori 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 Woori Financial Group are associated (or correlated) with CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of Woori Financial i.e., Woori Financial and CF Bankshares go up and down completely randomly.
Pair Corralation between Woori Financial and CF Bankshares
Allowing for the 90-day total investment horizon Woori Financial is expected to generate 44.77 times less return on investment than CF Bankshares. But when comparing it to its historical volatility, Woori Financial Group is 1.48 times less risky than CF Bankshares. It trades about 0.01 of its potential returns per unit of risk. CF Bankshares is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,492 in CF Bankshares on August 24, 2024 and sell it today you would earn a total of 303.00 from holding CF Bankshares or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. CF Bankshares
Performance |
| Timeline |
| Woori Financial Group |
| CF Bankshares |
Woori Financial and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and CF Bankshares
The main advantage of trading using opposite Woori Financial and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, CF Bankshares 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 CF Bankshares will offset losses from the drop in CF Bankshares' long position.| Woori Financial vs. Banco Bradesco SA | Woori Financial vs. Itau Unibanco Banco | Woori Financial vs. Banco Santander Brasil | Woori Financial vs. Western Alliance Bancorporation |
| CF Bankshares vs. Banco Bradesco SA | CF Bankshares vs. Itau Unibanco Banco | CF Bankshares vs. Banco Santander Brasil | CF Bankshares vs. Western Alliance Bancorporation |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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