Correlation Between Woori Financial and Red River
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Red River 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 Red River 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 Red River Bancshares, you can compare the effects of market volatilities on Woori Financial and Red River 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 Red River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Red River.
Diversification Opportunities for Woori Financial and Red River
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Red is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Red River Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red River 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 Red River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red River Bancshares has no effect on the direction of Woori Financial i.e., Woori Financial and Red River go up and down completely randomly.
Pair Corralation between Woori Financial and Red River
Allowing for the 90-day total investment horizon Woori Financial is expected to generate 3.47 times less return on investment than Red River. But when comparing it to its historical volatility, Woori Financial Group is 1.55 times less risky than Red River. It trades about 0.16 of its potential returns per unit of risk. Red River Bancshares is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 5,287 in Red River Bancshares on August 27, 2024 and sell it today you would earn a total of 773.00 from holding Red River Bancshares or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Red River Bancshares
Performance |
| Timeline |
| Woori Financial Group |
| Red River Bancshares |
Woori Financial and Red River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Red River
The main advantage of trading using opposite Woori Financial and Red River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Red River 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 Red River will offset losses from the drop in Red River's long position.| Woori Financial vs. Banco Santander Brasil | Woori Financial vs. CrossFirst Bankshares | Woori Financial vs. Banco Bradesco SA | Woori Financial vs. CF Bankshares |
| Red River vs. Home Federal Bancorp | Red River vs. Magyar Bancorp | Red River vs. Community West Bancshares | Red River vs. Rhinebeck 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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