Correlation Between Woori Financial and National Bank
Can any of the company-specific risk be diversified away by investing in both Woori Financial and National Bank 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 National Bank 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 National Bank Holdings, you can compare the effects of market volatilities on Woori Financial and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and National Bank.
Diversification Opportunities for Woori Financial and National Bank
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and National is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Woori Financial i.e., Woori Financial and National Bank go up and down completely randomly.
Pair Corralation between Woori Financial and National Bank
Allowing for the 90-day total investment horizon Woori Financial is expected to generate 1.83 times less return on investment than National Bank. But when comparing it to its historical volatility, Woori Financial Group is 1.12 times less risky than National Bank. It trades about 0.07 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,650 in National Bank Holdings on August 24, 2024 and sell it today you would earn a total of 1,151 from holding National Bank Holdings or generate 31.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Woori Financial Group vs. National Bank Holdings
Performance |
| Timeline |
| Woori Financial Group |
| National Bank Holdings |
Woori Financial and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and National Bank
The main advantage of trading using opposite Woori Financial and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. KB Financial Group | Woori Financial vs. Banco De Chile | Woori Financial vs. Orix Corp Ads |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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