Correlation Between Grupo Aval and Auburn National

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

By analyzing existing cross correlation between Grupo Aval and Auburn National Bancorporation, you can compare the effects of market volatilities on Grupo Aval and Auburn National 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 Aval with a short position of Auburn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Auburn National.

Diversification Opportunities for Grupo Aval and Auburn National

0.54

Correlation Coefficient

Grupo Aval  Auburn National

Very weak diversification

The 3 months correlation between Grupo and Auburn is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Auburn National Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn National Banc and Grupo Aval 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 Aval are associated (or correlated) with Auburn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn National Banc has no effect on the direction of Grupo Aval i.e., Grupo Aval and Auburn National go up and down completely randomly.

Pair Corralation between Grupo Aval and Auburn National

Given the investment horizon of 90 days Grupo Aval is expected to generate 0.75 times more return on investment than Auburn National. However, Grupo Aval is 1.33 times less risky than Auburn National. It trades about 0.01 of its potential returns per unit of risk. Auburn National Bancorporation is currently generating about -0.08 per unit of risk. If you would invest  216.00  in Grupo Aval on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Grupo Aval or generate 0.0% return on investment over 90 days.

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

Grupo Aval  vs.  Auburn National Bancorp.

Grupo Aval

Risk-Adjusted Performance

6 of 100

Modest

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

Auburn National Banc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn National Bancorporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Auburn National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grupo Aval and Auburn National

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

The idea behind Grupo Aval and Auburn National Bancorporation 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.