Correlation Between Grupo Financiero and Kimberly Clark

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

Diversification Opportunities for Grupo Financiero and Kimberly Clark

-0.12

Correlation Coefficient

Grupo Financiero  Kimberly Clark

Good diversification

The 3 months correlation between Grupo and Kimberly is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Kimberly Clark de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de 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 Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Kimberly Clark go up and down completely randomly.

Pair Corralation between Grupo Financiero and Kimberly Clark

Assuming the 90 days trading horizon Grupo Financiero is expected to generate 1.6 times less return on investment than Kimberly Clark. In addition to that, Grupo Financiero is 1.15 times more volatile than Kimberly Clark de Mxico. It trades about 0.1 of its total potential returns per unit of risk. Kimberly Clark de Mxico is currently generating about 0.18 per unit of volatility. If you would invest  2,704  in Kimberly Clark de Mxico on November 20, 2024 and sell it today you would earn a total of  441.00  from holding Kimberly Clark de Mxico or generate 16.31% return on investment over 90 days.

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

Grupo Financiero Inbursa  vs.  Kimberly Clark de Mxico

Grupo Financiero Inbursa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Inbursa are ranked lower than 7 (%) 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 March 2025.

Kimberly Clark de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark de Mxico are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Kimberly Clark sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Financiero and Kimberly Clark

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

The idea behind Grupo Financiero Inbursa and Kimberly Clark de Mxico 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.