Correlation Between Promotora and Intuit

Can any of the company-specific risk be diversified away by investing in both Promotora and Intuit 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 Intuit 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 Intuit Inc, you can compare the effects of market volatilities on Promotora and Intuit 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 Intuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Intuit.

Diversification Opportunities for Promotora and Intuit

-0.84

Correlation Coefficient

Promotora  Intuit

Pay attention - limited upside

The 3 months correlation between Promotora and Intuit is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Intuit Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuit Inc 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 Intuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuit Inc has no effect on the direction of Promotora i.e., Promotora and Intuit go up and down completely randomly.

Pair Corralation between Promotora and Intuit

Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 0.87 times more return on investment than Intuit. However, Promotora y Operadora is 1.14 times less risky than Intuit. It trades about 0.19 of its potential returns per unit of risk. Intuit Inc is currently generating about -0.07 per unit of risk. If you would invest  17,253  in Promotora y Operadora on December 25, 2024 and sell it today you would earn a total of  3,066  from holding Promotora y Operadora or generate 17.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Promotora y Operadora  vs.  Intuit Inc

Promotora y Operadora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Promotora sustained solid returns over the last few months and may actually be approaching a breakup point.

Intuit Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuit Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Promotora and Intuit

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

The idea behind Promotora y Operadora and Intuit Inc 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.