Correlation Between IPC MEXICO and Fibra Mty

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

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

Diversification Opportunities for IPC MEXICO and Fibra Mty

-0.6

Correlation Coefficient

IPC MEXICO  Fibra Mty

Excellent diversification

The 3 months correlation between IPC and Fibra is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO i.e., IPC MEXICO and Fibra Mty go up and down completely randomly.

Pair Corralation between IPC MEXICO and Fibra Mty

Assuming the 90 days trading horizon IPC MEXICO is expected to under-perform the Fibra Mty. But the index apears to be less risky and, when comparing its historical volatility, IPC MEXICO is 1.44 times less risky than Fibra Mty. The index trades about 0.0 of its potential returns per unit of risk. The Fibra Mty SAPI is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,032  in Fibra Mty SAPI on October 26, 2024 and sell it today you would earn a total of  12.00  from holding Fibra Mty SAPI or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.63%
Values	Daily Returns

IPC MEXICO  vs.  Fibra Mty SAPI

Pair Trading with IPC MEXICO and Fibra Mty

The main advantage of trading using opposite IPC MEXICO and Fibra Mty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO 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 IPC MEXICO 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.