Correlation Between Grupo Carso and Federal Agricultural

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

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

Diversification Opportunities for Grupo Carso and Federal Agricultural

-0.18

Correlation Coefficient

Grupo Carso  Federal Agricultural

Good diversification

The 3 months correlation between Grupo and Federal is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Grupo Carso 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 Carso SAB are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Grupo Carso i.e., Grupo Carso and Federal Agricultural go up and down completely randomly.

Pair Corralation between Grupo Carso and Federal Agricultural

Assuming the 90 days horizon Grupo Carso SAB is expected to generate 1.47 times more return on investment than Federal Agricultural. However, Grupo Carso is 1.47 times more volatile than Federal Agricultural Mortgage. It trades about 0.06 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.06 per unit of risk. If you would invest  235.00  in Grupo Carso SAB on October 11, 2024 and sell it today you would earn a total of  280.00  from holding Grupo Carso SAB or generate 119.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Grupo Carso SAB  vs.  Federal Agricultural Mortgage

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Federal Agricultural

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Agricultural Mortgage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Federal Agricultural may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grupo Carso and Federal Agricultural

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

The idea behind Grupo Carso SAB and Federal Agricultural Mortgage 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.