Correlation Between Promotora and IShares Core

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

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

Diversification Opportunities for Promotora and IShares Core

0.06

Correlation Coefficient

Promotora  IShares Core

Significant diversification

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

Pair Corralation between Promotora and IShares Core

Assuming the 90 days trading horizon Promotora is expected to generate 1.33 times less return on investment than IShares Core. In addition to that, Promotora is 1.86 times more volatile than iShares Core MSCI. It trades about 0.04 of its total potential returns per unit of risk. iShares Core MSCI is currently generating about 0.1 per unit of volatility. If you would invest  79,541  in iShares Core MSCI on September 12, 2024 and sell it today you would earn a total of  30,459  from holding iShares Core MSCI or generate 38.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Promotora y Operadora  vs.  iShares Core MSCI

Promotora y Operadora

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Promotora is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Core MSCI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Promotora and IShares Core

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

The idea behind Promotora y Operadora and iShares Core MSCI 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.