Correlation Between Banco De and Bank First

Can any of the company-specific risk be diversified away by investing in both Banco De and Bank First 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 Banco De and Bank First into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco De Chile and Bank First National, you can compare the effects of market volatilities on Banco De and Bank First 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 Banco De with a short position of Bank First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Bank First.

Diversification Opportunities for Banco De and Bank First

-0.52

Correlation Coefficient

Banco De  Bank First

Excellent diversification

The 3 months correlation between Banco and Bank is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National and Banco De 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 Banco De Chile are associated (or correlated) with Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Banco De i.e., Banco De and Bank First go up and down completely randomly.

Pair Corralation between Banco De and Bank First

Considering the 90-day investment horizon Banco De Chile is expected to generate 0.95 times more return on investment than Bank First. However, Banco De Chile is 1.05 times less risky than Bank First. It trades about 0.04 of its potential returns per unit of risk. Bank First National is currently generating about 0.02 per unit of risk. If you would invest  1,718  in Banco De Chile on January 24, 2024 and sell it today you would earn a total of  492.00  from holding Banco De Chile or generate 28.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Banco De Chile  vs.  Bank First National

Banco De Chile

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Bank First National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank First National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Banco De and Bank First

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

The idea behind Banco De Chile and Bank First National 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.