Correlation Between Grupo Financiero and Banco Del

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

Diversification Opportunities for Grupo Financiero and Banco Del

0.36

Correlation Coefficient

Grupo Financiero  Banco Del

Weak diversification

The 3 months correlation between Grupo and Banco is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Banorte and Banco del Bajo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco del Bajo 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 Banco Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco del Bajo has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Banco Del go up and down completely randomly.

Pair Corralation between Grupo Financiero and Banco Del

Assuming the 90 days trading horizon Grupo Financiero is expected to generate 2.06 times less return on investment than Banco Del. But when comparing it to its historical volatility, Grupo Financiero Banorte is 1.19 times less risky than Banco Del. It trades about 0.16 of its potential returns per unit of risk. Banco del Bajo is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  4,276  in Banco del Bajo on October 23, 2024 and sell it today you would earn a total of  420.00  from holding Banco del Bajo or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Grupo Financiero Banorte  vs.  Banco del Bajo

Grupo Financiero Banorte

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Banorte are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Banco del Bajo

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banco del Bajo are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking indicators, Banco Del is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grupo Financiero and Banco Del

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

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