Correlation Between Woori Financial and Pacific Premier

Can any of the company-specific risk be diversified away by investing in both Woori Financial and Pacific Premier 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 Pacific Premier 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 Pacific Premier Bancorp, you can compare the effects of market volatilities on Woori Financial and Pacific Premier 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 Pacific Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Pacific Premier.

Diversification Opportunities for Woori Financial and Pacific Premier

-0.17

Correlation Coefficient

Woori Financial  Pacific Premier

Good diversification

The 3 months correlation between Woori and Pacific is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Pacific Premier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Premier Bancorp 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 Pacific Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Premier Bancorp has no effect on the direction of Woori Financial i.e., Woori Financial and Pacific Premier go up and down completely randomly.

Pair Corralation between Woori Financial and Pacific Premier

Allowing for the 90-day total investment horizon Woori Financial is expected to generate 1.45 times less return on investment than Pacific Premier. But when comparing it to its historical volatility, Woori Financial Group is 1.15 times less risky than Pacific Premier. It trades about 0.01 of its potential returns per unit of risk. Pacific Premier Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,276  in Pacific Premier Bancorp on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Pacific Premier Bancorp or generate 0.0% 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.  Pacific Premier Bancorp

Woori Financial Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Woori Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pacific Premier Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Premier Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Pacific Premier is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Woori Financial and Pacific Premier

The main advantage of trading using opposite Woori Financial and Pacific Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Pacific Premier 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 Pacific Premier will offset losses from the drop in Pacific Premier's long position.

The idea behind Woori Financial Group and Pacific Premier Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.