Correlation Between New Germany and Mexico Equity

Can any of the company-specific risk be diversified away by investing in both New Germany and Mexico Equity 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 New Germany and Mexico Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Germany Closed and Mexico Equity And, you can compare the effects of market volatilities on New Germany and Mexico Equity 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 New Germany with a short position of Mexico Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Germany and Mexico Equity.

Diversification Opportunities for New Germany and Mexico Equity

0.75

Correlation Coefficient

New Germany  Mexico Equity

Poor diversification

The 3 months correlation between New and Mexico is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding New Germany Closed and Mexico Equity And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexico Equity And and New Germany 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 New Germany Closed are associated (or correlated) with Mexico Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexico Equity And has no effect on the direction of New Germany i.e., New Germany and Mexico Equity go up and down completely randomly.

Pair Corralation between New Germany and Mexico Equity

Allowing for the 90-day total investment horizon New Germany Closed is expected to generate 1.08 times more return on investment than Mexico Equity. However, New Germany is 1.08 times more volatile than Mexico Equity And. It trades about 0.33 of its potential returns per unit of risk. Mexico Equity And is currently generating about 0.08 per unit of risk. If you would invest  795.00  in New Germany Closed on December 26, 2024 and sell it today you would earn a total of  237.00  from holding New Germany Closed or generate 29.81% return on investment over 90 days.

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

New Germany Closed  vs.  Mexico Equity And

New Germany Closed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New Germany Closed are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly uncertain technical and fundamental indicators, New Germany reported solid returns over the last few months and may actually be approaching a breakup point.

Mexico Equity And

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mexico Equity And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather fragile basic indicators, Mexico Equity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with New Germany and Mexico Equity

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

The idea behind New Germany Closed and Mexico Equity And 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.