Correlation Between Bolsa Mexicana and General Dynamics

Can any of the company-specific risk be diversified away by investing in both Bolsa Mexicana and General Dynamics 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 Bolsa Mexicana and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bolsa Mexicana de and General Dynamics, you can compare the effects of market volatilities on Bolsa Mexicana and General Dynamics 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 Bolsa Mexicana with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolsa Mexicana and General Dynamics.

Diversification Opportunities for Bolsa Mexicana and General Dynamics

-0.37

Correlation Coefficient

Bolsa Mexicana  General Dynamics

Very good diversification

The 3 months correlation between Bolsa and General is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bolsa Mexicana de and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and Bolsa Mexicana 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 Bolsa Mexicana de are associated (or correlated) with General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Bolsa Mexicana i.e., Bolsa Mexicana and General Dynamics go up and down completely randomly.

Pair Corralation between Bolsa Mexicana and General Dynamics

Assuming the 90 days trading horizon Bolsa Mexicana de is expected to under-perform the General Dynamics. In addition to that, Bolsa Mexicana is 1.43 times more volatile than General Dynamics. It trades about 0.0 of its total potential returns per unit of risk. General Dynamics is currently generating about 0.04 per unit of volatility. If you would invest  434,351  in General Dynamics on October 13, 2024 and sell it today you would earn a total of  96,111  from holding General Dynamics or generate 22.13% return on investment over 90 days.

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

Bolsa Mexicana de  vs.  General Dynamics

Bolsa Mexicana de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolsa Mexicana de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Bolsa Mexicana is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

General Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bolsa Mexicana and General Dynamics

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

The idea behind Bolsa Mexicana de and General Dynamics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.