Correlation Between Banco Macro and Grupo Financiero

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

Diversification Opportunities for Banco Macro and Grupo Financiero

0.97

Correlation Coefficient

Banco Macro  Grupo Financiero

Almost no diversification

The 3 months correlation between Banco and Grupo is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Banco Macro SA and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of Banco Macro i.e., Banco Macro and Grupo Financiero go up and down completely randomly.

Pair Corralation between Banco Macro and Grupo Financiero

Considering the 90-day investment horizon Banco Macro SA is expected to under-perform the Grupo Financiero. In addition to that, Banco Macro is 1.19 times more volatile than Grupo Financiero Galicia. It trades about -0.06 of its total potential returns per unit of risk. Grupo Financiero Galicia is currently generating about -0.02 per unit of volatility. If you would invest  6,282  in Grupo Financiero Galicia on December 28, 2024 and sell it today you would lose (504.00) from holding Grupo Financiero Galicia or give up 8.02% of portfolio value over 90 days.

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

Banco Macro SA  vs.  Grupo Financiero Galicia

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.

Grupo Financiero Galicia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Financiero Galicia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Grupo Financiero is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Banco Macro and Grupo Financiero

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

The idea behind Banco Macro SA and Grupo Financiero Galicia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.