Correlation Between IPC MEXICO and INVEX Controladora

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

By analyzing existing cross correlation between IPC MEXICO and INVEX Controladora SAB, you can compare the effects of market volatilities on IPC MEXICO and INVEX Controladora 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 INVEX Controladora. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and INVEX Controladora.

Diversification Opportunities for IPC MEXICO and INVEX Controladora

0.17

Correlation Coefficient

IPC MEXICO  INVEX Controladora

Average diversification

The 3 months correlation between IPC and INVEX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and INVEX Controladora SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVEX Controladora SAB 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 INVEX Controladora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVEX Controladora SAB has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and INVEX Controladora go up and down completely randomly.

Pair Corralation between IPC MEXICO and INVEX Controladora

Assuming the 90 days trading horizon IPC MEXICO is expected to generate 24.4 times less return on investment than INVEX Controladora. In addition to that, IPC MEXICO is 1.71 times more volatile than INVEX Controladora SAB. It trades about 0.0 of its total potential returns per unit of risk. INVEX Controladora SAB is currently generating about 0.05 per unit of volatility. If you would invest  7,406  in INVEX Controladora SAB on September 25, 2024 and sell it today you would earn a total of  894.00  from holding INVEX Controladora SAB or generate 12.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

IPC MEXICO  vs.  INVEX Controladora SAB

Pair Trading with IPC MEXICO and INVEX Controladora

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

The idea behind IPC MEXICO and INVEX Controladora 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.