Correlation Between Desarrolladora Homex and Masco

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

By analyzing existing cross correlation between Desarrolladora Homex SAB and Masco, you can compare the effects of market volatilities on Desarrolladora Homex and Masco 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 Desarrolladora Homex with a short position of Masco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desarrolladora Homex and Masco.

Diversification Opportunities for Desarrolladora Homex and Masco

-0.77

Correlation Coefficient

Desarrolladora Homex  Masco

Pay attention - limited upside

The 3 months correlation between Desarrolladora and Masco is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Desarrolladora Homex SAB and Masco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masco and Desarrolladora Homex 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 Desarrolladora Homex SAB are associated (or correlated) with Masco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masco has no effect on the direction of Desarrolladora Homex i.e., Desarrolladora Homex and Masco go up and down completely randomly.

Pair Corralation between Desarrolladora Homex and Masco

Assuming the 90 days trading horizon Desarrolladora Homex SAB is expected to under-perform the Masco. In addition to that, Desarrolladora Homex is 116.7 times more volatile than Masco. It trades about -0.18 of its total potential returns per unit of risk. Masco is currently generating about 0.13 per unit of volatility. If you would invest  114,242  in Masco on September 23, 2024 and sell it today you would earn a total of  584.00  from holding Masco or generate 0.51% return on investment over 90 days.

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

Desarrolladora Homex SAB  vs.  Masco

Desarrolladora Homex SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desarrolladora Homex SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Masco

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Masco are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Masco is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Desarrolladora Homex and Masco

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

The idea behind Desarrolladora Homex SAB and Masco 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.