Correlation Between Grupo Mxico and BRUNELLO C

Can any of the company-specific risk be diversified away by investing in both Grupo Mxico and BRUNELLO C 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 Grupo Mxico and BRUNELLO C into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Mxico SAB and BRUNELLO C SPA, you can compare the effects of market volatilities on Grupo Mxico and BRUNELLO C 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 Grupo Mxico with a short position of BRUNELLO C. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mxico and BRUNELLO C.

Diversification Opportunities for Grupo Mxico and BRUNELLO C

0.66

Correlation Coefficient

Grupo Mxico  BRUNELLO C

Poor diversification

The 3 months correlation between Grupo and BRUNELLO is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and BRUNELLO C SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRUNELLO C SPA and Grupo Mxico 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 Grupo Mxico SAB are associated (or correlated) with BRUNELLO C. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRUNELLO C SPA has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and BRUNELLO C go up and down completely randomly.

Pair Corralation between Grupo Mxico and BRUNELLO C

Assuming the 90 days horizon Grupo Mxico is expected to generate 6.06 times less return on investment than BRUNELLO C. In addition to that, Grupo Mxico is 1.58 times more volatile than BRUNELLO C SPA. It trades about 0.04 of its total potential returns per unit of risk. BRUNELLO C SPA is currently generating about 0.36 per unit of volatility. If you would invest  9,380  in BRUNELLO C SPA on September 28, 2024 and sell it today you would earn a total of  1,130  from holding BRUNELLO C SPA or generate 12.05% return on investment over 90 days.

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

Grupo Mxico SAB  vs.  BRUNELLO C SPA

Grupo Mxico SAB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Mxico SAB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Mxico reported solid returns over the last few months and may actually be approaching a breakup point.

BRUNELLO C SPA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BRUNELLO C SPA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BRUNELLO C may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Mxico and BRUNELLO C

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

The idea behind Grupo Mxico SAB and BRUNELLO C SPA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.