Correlation Between Grupo Financiero and Grupo Carso

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

Diversification Opportunities for Grupo Financiero and Grupo Carso

0.74

Correlation Coefficient

Grupo Financiero  Grupo Carso

Poor diversification

The 3 months correlation between Grupo and Grupo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Banorte and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso 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 Banorte are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Grupo Carso go up and down completely randomly.

Pair Corralation between Grupo Financiero and Grupo Carso

Assuming the 90 days trading horizon Grupo Financiero Banorte is expected to generate 0.85 times more return on investment than Grupo Carso. However, Grupo Financiero Banorte is 1.18 times less risky than Grupo Carso. It trades about 0.09 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.05 per unit of risk. If you would invest  13,681  in Grupo Financiero Banorte on December 25, 2024 and sell it today you would earn a total of  1,095  from holding Grupo Financiero Banorte or generate 8.0% return on investment over 90 days.

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

Grupo Financiero Banorte  vs.  Grupo Carso SAB

Grupo Financiero Banorte

Risk-Adjusted Performance

OK

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

Grupo Carso SAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Financiero and Grupo Carso

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

The idea behind Grupo Financiero Banorte and Grupo Carso 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.