Correlation Between Lear and Fibra Mty

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

By analyzing existing cross correlation between Lear Corporation and Fibra Mty SAPI, you can compare the effects of market volatilities on Lear and Fibra Mty 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 Lear with a short position of Fibra Mty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lear and Fibra Mty.

Diversification Opportunities for Lear and Fibra Mty

-0.27

Correlation Coefficient

Lear  Fibra Mty

Very good diversification

The 3 months correlation between Lear and Fibra is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and Fibra Mty SAPI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Mty SAPI and Lear 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 Lear Corporation are associated (or correlated) with Fibra Mty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Mty SAPI has no effect on the direction of Lear i.e., Lear and Fibra Mty go up and down completely randomly.

Pair Corralation between Lear and Fibra Mty

Assuming the 90 days trading horizon Lear Corporation is expected to under-perform the Fibra Mty. But the stock apears to be less risky and, when comparing its historical volatility, Lear Corporation is 2.22 times less risky than Fibra Mty. The stock trades about -0.1 of its potential returns per unit of risk. The Fibra Mty SAPI is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,050  in Fibra Mty SAPI on December 20, 2024 and sell it today you would earn a total of  157.00  from holding Fibra Mty SAPI or generate 14.95% return on investment over 90 days.

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

Lear Corp.  vs.  Fibra Mty SAPI

Lear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lear Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lear is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Fibra Mty SAPI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra Mty SAPI are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibra Mty sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lear and Fibra Mty

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

The idea behind Lear Corporation and Fibra Mty SAPI 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.