Correlation Between Vanguard Bond and Grupo Aeroportuario

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

By analyzing existing cross correlation between Vanguard Bond Index and Grupo Aeroportuario del, you can compare the effects of market volatilities on Vanguard Bond and Grupo Aeroportuario 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 Vanguard Bond with a short position of Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Bond and Grupo Aeroportuario.

Diversification Opportunities for Vanguard Bond and Grupo Aeroportuario

0.09

Correlation Coefficient

Vanguard Bond  Grupo Aeroportuario

Significant diversification

The 3 months correlation between Vanguard and Grupo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Bond Index and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del and Vanguard Bond 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 Vanguard Bond Index are associated (or correlated) with Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Vanguard Bond i.e., Vanguard Bond and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Vanguard Bond and Grupo Aeroportuario

Assuming the 90 days trading horizon Vanguard Bond is expected to generate 1.48 times less return on investment than Grupo Aeroportuario. But when comparing it to its historical volatility, Vanguard Bond Index is 1.99 times less risky than Grupo Aeroportuario. It trades about 0.12 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,997  in Grupo Aeroportuario del on October 5, 2024 and sell it today you would earn a total of  1,717  from holding Grupo Aeroportuario del or generate 10.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Vanguard Bond Index  vs.  Grupo Aeroportuario del

Vanguard Bond Index

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Bond Index are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Vanguard Bond may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Grupo Aeroportuario del

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Vanguard Bond and Grupo Aeroportuario

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

The idea behind Vanguard Bond Index and Grupo Aeroportuario del 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.