Correlation Between Grupo Carso and Retail Estates

Can any of the company-specific risk be diversified away by investing in both Grupo Carso and Retail Estates 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 Retail Estates 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 Retail Estates NV, you can compare the effects of market volatilities on Grupo Carso and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and Retail Estates.

Diversification Opportunities for Grupo Carso and Retail Estates

0.29

Correlation Coefficient

Grupo Carso  Retail Estates

Modest diversification

The 3 months correlation between Grupo and Retail is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Grupo Carso i.e., Grupo Carso and Retail Estates go up and down completely randomly.

Pair Corralation between Grupo Carso and Retail Estates

Assuming the 90 days horizon Grupo Carso SAB is expected to generate 1.68 times more return on investment than Retail Estates. However, Grupo Carso is 1.68 times more volatile than Retail Estates NV. It trades about 0.1 of its potential returns per unit of risk. Retail Estates NV is currently generating about -0.07 per unit of risk. If you would invest  515.00  in Grupo Carso SAB on October 22, 2024 and sell it today you would earn a total of  15.00  from holding Grupo Carso SAB or generate 2.91% return on investment over 90 days.

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

Grupo Carso SAB  vs.  Retail Estates NV

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 nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV 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.

Pair Trading with Grupo Carso and Retail Estates

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

The idea behind Grupo Carso SAB and Retail Estates NV 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.