Correlation Between Prosperity Bancshares and Woori Financial

Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Woori Financial 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 Prosperity Bancshares and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prosperity Bancshares and Woori Financial Group, you can compare the effects of market volatilities on Prosperity Bancshares and Woori Financial 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 Prosperity Bancshares with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Woori Financial.

Diversification Opportunities for Prosperity Bancshares and Woori Financial

-0.38

Correlation Coefficient

Prosperity Bancshares  Woori Financial

Very good diversification

The 3 months correlation between Prosperity and Woori is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Woori Financial go up and down completely randomly.

Pair Corralation between Prosperity Bancshares and Woori Financial

Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.96 times more return on investment than Woori Financial. However, Prosperity Bancshares is 1.04 times less risky than Woori Financial. It trades about 0.09 of its potential returns per unit of risk. Woori Financial Group is currently generating about -0.06 per unit of risk. If you would invest  7,297  in Prosperity Bancshares on September 14, 2024 and sell it today you would earn a total of  706.00  from holding Prosperity Bancshares or generate 9.68% return on investment over 90 days.

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

Prosperity Bancshares  vs.  Woori Financial Group

Prosperity Bancshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prosperity Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Prosperity Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak 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.

Pair Trading with Prosperity Bancshares and Woori Financial

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

The idea behind Prosperity Bancshares and Woori Financial Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.