Correlation Between Banco Macro and Empresa Distribuidora

Can any of the company-specific risk be diversified away by investing in both Banco Macro and Empresa Distribuidora 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 Banco Macro and Empresa Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Macro SA and Empresa Distribuidora y, you can compare the effects of market volatilities on Banco Macro and Empresa Distribuidora 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 Banco Macro with a short position of Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Macro and Empresa Distribuidora.

Diversification Opportunities for Banco Macro and Empresa Distribuidora

0.55

Correlation Coefficient

Banco Macro  Empresa Distribuidora

Very weak diversification

The 3 months correlation between Banco and Empresa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Banco Macro SA and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora and Banco Macro 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 Banco Macro SA are associated (or correlated) with Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Banco Macro i.e., Banco Macro and Empresa Distribuidora go up and down completely randomly.

Pair Corralation between Banco Macro and Empresa Distribuidora

Considering the 90-day investment horizon Banco Macro SA is expected to generate 0.95 times more return on investment than Empresa Distribuidora. However, Banco Macro SA is 1.05 times less risky than Empresa Distribuidora. It trades about -0.07 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about -0.1 per unit of risk. If you would invest  9,732  in Banco Macro SA on December 29, 2024 and sell it today you would lose (1,894) from holding Banco Macro SA or give up 19.46% of portfolio value over 90 days.

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

Banco Macro SA  vs.  Empresa Distribuidora y

Banco Macro SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Macro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Empresa Distribuidora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empresa Distribuidora y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Banco Macro and Empresa Distribuidora

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

The idea behind Banco Macro SA and Empresa Distribuidora y 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.