Correlation Between Bolsa Mexicana and Grupo Sports

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

Diversification Opportunities for Bolsa Mexicana and Grupo Sports

0.08

Correlation Coefficient

Bolsa Mexicana  Grupo Sports

Significant diversification

The 3 months correlation between Bolsa and Grupo is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bolsa Mexicana de and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of Bolsa Mexicana i.e., Bolsa Mexicana and Grupo Sports go up and down completely randomly.

Pair Corralation between Bolsa Mexicana and Grupo Sports

Assuming the 90 days trading horizon Bolsa Mexicana de is expected to generate 1.72 times more return on investment than Grupo Sports. However, Bolsa Mexicana is 1.72 times more volatile than Grupo Sports World. It trades about 0.07 of its potential returns per unit of risk. Grupo Sports World is currently generating about 0.01 per unit of risk. If you would invest  3,318  in Bolsa Mexicana de on December 28, 2024 and sell it today you would earn a total of  255.00  from holding Bolsa Mexicana de or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Bolsa Mexicana de  vs.  Grupo Sports World

Bolsa Mexicana de

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bolsa Mexicana de are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Bolsa Mexicana may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grupo Sports World

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bolsa Mexicana and Grupo Sports

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

The idea behind Bolsa Mexicana de and Grupo Sports World 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.