Correlation Between Texas Instruments and Grupo Hotelero

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

By analyzing existing cross correlation between Texas Instruments Incorporated and Grupo Hotelero Santa, you can compare the effects of market volatilities on Texas Instruments and Grupo Hotelero 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 Texas Instruments with a short position of Grupo Hotelero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Instruments and Grupo Hotelero.

Diversification Opportunities for Texas Instruments and Grupo Hotelero

0.45

Correlation Coefficient

Texas Instruments  Grupo Hotelero

Very weak diversification

The 3 months correlation between Texas and Grupo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Texas Instruments Incorporated and Grupo Hotelero Santa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Hotelero Santa and Texas Instruments 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 Texas Instruments Incorporated are associated (or correlated) with Grupo Hotelero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Hotelero Santa has no effect on the direction of Texas Instruments i.e., Texas Instruments and Grupo Hotelero go up and down completely randomly.

Pair Corralation between Texas Instruments and Grupo Hotelero

Assuming the 90 days trading horizon Texas Instruments Incorporated is expected to generate 0.56 times more return on investment than Grupo Hotelero. However, Texas Instruments Incorporated is 1.79 times less risky than Grupo Hotelero. It trades about 0.18 of its potential returns per unit of risk. Grupo Hotelero Santa is currently generating about 0.06 per unit of risk. If you would invest  380,000  in Texas Instruments Incorporated on October 20, 2024 and sell it today you would earn a total of  18,160  from holding Texas Instruments Incorporated or generate 4.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Texas Instruments Incorporated  vs.  Grupo Hotelero Santa

Texas Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Instruments Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Texas Instruments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grupo Hotelero Santa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Hotelero Santa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Grupo Hotelero may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Texas Instruments and Grupo Hotelero

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

The idea behind Texas Instruments Incorporated and Grupo Hotelero Santa 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.