Correlation Between Grupo Financiero and Compaa Minera

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

By analyzing existing cross correlation between Grupo Financiero Banorte and Compaa Minera Autln, you can compare the effects of market volatilities on Grupo Financiero and Compaa Minera 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 Compaa Minera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Compaa Minera.

Diversification Opportunities for Grupo Financiero and Compaa Minera

-0.39

Correlation Coefficient

Grupo Financiero  Compaa Minera

Very good diversification

The 3 months correlation between Grupo and Compaa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Banorte and Compaa Minera Autln in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compaa Minera Autln 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 Banorte are associated (or correlated) with Compaa Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compaa Minera Autln has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Compaa Minera go up and down completely randomly.

Pair Corralation between Grupo Financiero and Compaa Minera

Assuming the 90 days trading horizon Grupo Financiero Banorte is expected to generate 1.71 times more return on investment than Compaa Minera. However, Grupo Financiero is 1.71 times more volatile than Compaa Minera Autln. It trades about 0.14 of its potential returns per unit of risk. Compaa Minera Autln is currently generating about -0.42 per unit of risk. If you would invest  13,514  in Grupo Financiero Banorte on October 26, 2024 and sell it today you would earn a total of  1,359  from holding Grupo Financiero Banorte or generate 10.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Grupo Financiero Banorte  vs.  Compaa Minera Autln

Grupo Financiero Banorte

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Banorte are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Grupo Financiero may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Compaa Minera Autln

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compaa Minera Autln 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 essential 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.

Pair Trading with Grupo Financiero and Compaa Minera

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

The idea behind Grupo Financiero Banorte and Compaa Minera Autln 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.