Correlation Between Financiera Independencia and Texas Instruments

Can any of the company-specific risk be diversified away by investing in both Financiera Independencia and Texas Instruments 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 Financiera Independencia and Texas Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Financiera Independencia SAB and Texas Instruments Incorporated, you can compare the effects of market volatilities on Financiera Independencia and Texas Instruments 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 Financiera Independencia with a short position of Texas Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financiera Independencia and Texas Instruments.

Diversification Opportunities for Financiera Independencia and Texas Instruments

0.12

Correlation Coefficient

Financiera Independencia  Texas Instruments

Average diversification

The 3 months correlation between Financiera and Texas is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Financiera Independencia SAB and Texas Instruments Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Instruments and Financiera Independencia 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 Financiera Independencia SAB are associated (or correlated) with Texas Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Instruments has no effect on the direction of Financiera Independencia i.e., Financiera Independencia and Texas Instruments go up and down completely randomly.

Pair Corralation between Financiera Independencia and Texas Instruments

Assuming the 90 days trading horizon Financiera Independencia SAB is expected to under-perform the Texas Instruments. But the stock apears to be less risky and, when comparing its historical volatility, Financiera Independencia SAB is 1.22 times less risky than Texas Instruments. The stock trades about -0.17 of its potential returns per unit of risk. The Texas Instruments Incorporated is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  396,577  in Texas Instruments Incorporated on October 20, 2024 and sell it today you would earn a total of  1,583  from holding Texas Instruments Incorporated or generate 0.4% return on investment over 90 days.

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

Financiera Independencia SAB  vs.  Texas Instruments Incorporated

Financiera Independencia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Texas Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Instruments Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Texas Instruments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Financiera Independencia and Texas Instruments

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

The idea behind Financiera Independencia SAB and Texas Instruments Incorporated 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.