Correlation Between IShares NAFTRAC and Grupo KUO

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

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

Diversification Opportunities for IShares NAFTRAC and Grupo KUO

-0.49

Correlation Coefficient

IShares NAFTRAC  Grupo KUO

Very good diversification

The 3 months correlation between IShares and Grupo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares NAFTRAC and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO SAB and IShares NAFTRAC 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 iShares NAFTRAC are associated (or correlated) with Grupo KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of IShares NAFTRAC i.e., IShares NAFTRAC and Grupo KUO go up and down completely randomly.

Pair Corralation between IShares NAFTRAC and Grupo KUO

Assuming the 90 days trading horizon iShares NAFTRAC is expected to under-perform the Grupo KUO. But the etf apears to be less risky and, when comparing its historical volatility, iShares NAFTRAC is 1.61 times less risky than Grupo KUO. The etf trades about -0.09 of its potential returns per unit of risk. The Grupo KUO SAB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,190  in Grupo KUO SAB on September 1, 2024 and sell it today you would earn a total of  100.00  from holding Grupo KUO SAB or generate 2.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

iShares NAFTRAC  vs.  Grupo KUO SAB

iShares NAFTRAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares NAFTRAC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares NAFTRAC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo KUO SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo KUO SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Grupo KUO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares NAFTRAC and Grupo KUO

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

The idea behind iShares NAFTRAC and Grupo KUO 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.