Correlation Between Lear and Grupo Industrial

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

By analyzing existing cross correlation between Lear Corporation and Grupo Industrial Saltillo, you can compare the effects of market volatilities on Lear and Grupo Industrial 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 Grupo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lear and Grupo Industrial.

Diversification Opportunities for Lear and Grupo Industrial

-0.06

Correlation Coefficient

Lear  Grupo Industrial

Good diversification

The 3 months correlation between Lear and Grupo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and Grupo Industrial Saltillo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Industrial Saltillo 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 Grupo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Industrial Saltillo has no effect on the direction of Lear i.e., Lear and Grupo Industrial go up and down completely randomly.

Pair Corralation between Lear and Grupo Industrial

If you would invest  1,670  in Grupo Industrial Saltillo on October 27, 2024 and sell it today you would earn a total of  90.00  from holding Grupo Industrial Saltillo or generate 5.39% 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.  Grupo Industrial Saltillo

Lear

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain fairly 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.

Grupo Industrial Saltillo

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Lear and Grupo Industrial

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

The idea behind Lear Corporation and Grupo Industrial Saltillo 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.