Correlation Between Woori Financial and Federal Hme
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Federal Hme 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 Federal Hme 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 Federal Hme 655, you can compare the effects of market volatilities on Woori Financial and Federal Hme 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 Federal Hme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Federal Hme.
Diversification Opportunities for Woori Financial and Federal Hme
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Woori and Federal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Federal Hme 655 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Hme 655 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 Federal Hme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Hme 655 has no effect on the direction of Woori Financial i.e., Woori Financial and Federal Hme go up and down completely randomly.
Pair Corralation between Woori Financial and Federal Hme
Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 0.28 times more return on investment than Federal Hme. However, Woori Financial Group is 3.61 times less risky than Federal Hme. It trades about 0.3 of its potential returns per unit of risk. Federal Hme 655 is currently generating about -0.09 per unit of risk. If you would invest 3,125 in Woori Financial Group on November 1, 2024 and sell it today you would earn a total of 144.00 from holding Woori Financial Group or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Woori Financial Group vs. Federal Hme 655
Performance |
| Timeline |
| Woori Financial Group |
| Federal Hme 655 |
Woori Financial and Federal Hme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Federal Hme
The main advantage of trading using opposite Woori Financial and Federal Hme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Federal Hme 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 Federal Hme will offset losses from the drop in Federal Hme's long position.| Woori Financial vs. JPMorgan Chase Co | Woori Financial vs. Citigroup | Woori Financial vs. Wells Fargo | Woori Financial vs. Toronto Dominion Bank |
| Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal National Mortgage |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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