Correlation Between Grupo Financiero and Grupo Aeroportuario

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

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

Diversification Opportunities for Grupo Financiero and Grupo Aeroportuario

0.6

Correlation Coefficient

Grupo Financiero  Grupo Aeroportuario

Poor diversification

The 3 months correlation between Grupo and Grupo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa 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 Grupo Financiero 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 Grupo Financiero Inbursa 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 Grupo Financiero i.e., Grupo Financiero and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Grupo Financiero and Grupo Aeroportuario

Assuming the 90 days trading horizon Grupo Financiero Inbursa is expected to generate 0.96 times more return on investment than Grupo Aeroportuario. However, Grupo Financiero Inbursa is 1.04 times less risky than Grupo Aeroportuario. It trades about 0.08 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.06 per unit of risk. If you would invest  4,306  in Grupo Financiero Inbursa on December 30, 2024 and sell it today you would earn a total of  359.00  from holding Grupo Financiero Inbursa or generate 8.34% return on investment over 90 days.

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

Grupo Financiero Inbursa  vs.  Grupo Aeroportuario del

Grupo Financiero Inbursa

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Inbursa are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Grupo Financiero may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grupo Aeroportuario del

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Grupo Aeroportuario may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grupo Financiero and Grupo Aeroportuario

The main advantage of trading using opposite Grupo Financiero and Grupo Aeroportuario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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 Grupo Financiero Inbursa 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.