Correlation Between Woori Financial and First Merchants
Can any of the company-specific risk be diversified away by investing in both Woori Financial and First Merchants 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 First Merchants 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 First Merchants, you can compare the effects of market volatilities on Woori Financial and First Merchants 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 First Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and First Merchants.
Diversification Opportunities for Woori Financial and First Merchants
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Woori and First is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and First Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Merchants 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 First Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Merchants has no effect on the direction of Woori Financial i.e., Woori Financial and First Merchants go up and down completely randomly.
Pair Corralation between Woori Financial and First Merchants
Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 2.47 times more return on investment than First Merchants. However, Woori Financial is 2.47 times more volatile than First Merchants. It trades about 0.07 of its potential returns per unit of risk. First Merchants is currently generating about 0.07 per unit of risk. If you would invest 2,710 in Woori Financial Group on August 24, 2024 and sell it today you would earn a total of 885.00 from holding Woori Financial Group or generate 32.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. First Merchants
Performance |
| Timeline |
| Woori Financial Group |
| First Merchants |
Woori Financial and First Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and First Merchants
The main advantage of trading using opposite Woori Financial and First Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, First Merchants 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 First Merchants will offset losses from the drop in First Merchants' 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 |
| First Merchants vs. Banco Bradesco SA | First Merchants vs. Itau Unibanco Banco | First Merchants vs. Banco Santander Brasil | First Merchants 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |