Correlation Between Woori Financial and First Interstate

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

Diversification Opportunities for Woori Financial and First Interstate

-0.34

Correlation Coefficient

Woori Financial  First Interstate

Very good diversification

The 3 months correlation between Woori and First is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and First Interstate BancSystem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Interstate Ban 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 First Interstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Interstate Ban has no effect on the direction of Woori Financial i.e., Woori Financial and First Interstate go up and down completely randomly.

Pair Corralation between Woori Financial and First Interstate

Allowing for the 90-day total investment horizon Woori Financial is expected to generate 4.41 times less return on investment than First Interstate. But when comparing it to its historical volatility, Woori Financial Group is 1.15 times less risky than First Interstate. It trades about 0.02 of its potential returns per unit of risk. First Interstate BancSystem is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,580  in First Interstate BancSystem on September 24, 2024 and sell it today you would earn a total of  684.00  from holding First Interstate BancSystem or generate 26.51% 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.  First Interstate BancSystem

Woori Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woori Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

First Interstate Ban

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Interstate BancSystem are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, First Interstate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Woori Financial and First Interstate

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

The idea behind Woori Financial Group and First Interstate BancSystem 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.