Correlation Between Grupo Financiero and Grupo Herdez

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

Diversification Opportunities for Grupo Financiero and Grupo Herdez

-0.06

Correlation Coefficient

Grupo Financiero  Grupo Herdez

Good diversification

The 3 months correlation between Grupo and Grupo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Grupo Herdez SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Herdez SAB 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 Herdez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Herdez SAB has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Grupo Herdez go up and down completely randomly.

Pair Corralation between Grupo Financiero and Grupo Herdez

Assuming the 90 days trading horizon Grupo Financiero is expected to generate 4.64 times less return on investment than Grupo Herdez. In addition to that, Grupo Financiero is 1.26 times more volatile than Grupo Herdez SAB. It trades about 0.01 of its total potential returns per unit of risk. Grupo Herdez SAB is currently generating about 0.06 per unit of volatility. If you would invest  4,246  in Grupo Herdez SAB on October 5, 2024 and sell it today you would earn a total of  1,162  from holding Grupo Herdez SAB or generate 27.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.62%
Values	Daily Returns

Grupo Financiero Inbursa  vs.  Grupo Herdez SAB

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Grupo Herdez SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Herdez SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grupo Herdez is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Financiero and Grupo Herdez

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

The idea behind Grupo Financiero Inbursa and Grupo Herdez SAB 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.