Correlation Between Woori Financial and Prosperity Bancshares
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares, you can compare the effects of market volatilities on Woori Financial and Prosperity Bancshares 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 Prosperity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Prosperity Bancshares.
Diversification Opportunities for Woori Financial and Prosperity Bancshares
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Prosperity is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Prosperity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity Bancshares 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 Prosperity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Bancshares has no effect on the direction of Woori Financial i.e., Woori Financial and Prosperity Bancshares go up and down completely randomly.
Pair Corralation between Woori Financial and Prosperity Bancshares
Allowing for the 90-day total investment horizon Woori Financial Group is expected to under-perform the Prosperity Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, Woori Financial Group is 1.33 times less risky than Prosperity Bancshares. The stock trades about -0.06 of its potential returns per unit of risk. The Prosperity Bancshares is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 7,226 in Prosperity Bancshares on August 26, 2024 and sell it today you would earn a total of 1,204 from holding Prosperity Bancshares or generate 16.66% 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. Prosperity Bancshares
Performance |
| Timeline |
| Woori Financial Group |
| Prosperity Bancshares |
Woori Financial and Prosperity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Prosperity Bancshares
The main advantage of trading using opposite Woori Financial and Prosperity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Prosperity Bancshares 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 Prosperity Bancshares will offset losses from the drop in Prosperity Bancshares' long position.| Woori Financial vs. Banco Santander Brasil | Woori Financial vs. CrossFirst Bankshares | Woori Financial vs. Banco Bradesco SA | Woori Financial vs. CF Bankshares |
| Prosperity Bancshares vs. Fifth Third Bancorp | Prosperity Bancshares vs. Zions Bancorporation | Prosperity Bancshares vs. Huntington Bancshares Incorporated | Prosperity Bancshares vs. PNC Financial Services |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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