Correlation Between Textron and Bolsa Mexicana

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

By analyzing existing cross correlation between Textron and Bolsa Mexicana de, you can compare the effects of market volatilities on Textron and Bolsa Mexicana 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 Textron with a short position of Bolsa Mexicana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Textron and Bolsa Mexicana.

Diversification Opportunities for Textron and Bolsa Mexicana

-0.17

Correlation Coefficient

Textron  Bolsa Mexicana

Good diversification

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

Pair Corralation between Textron and Bolsa Mexicana

Assuming the 90 days trading horizon Textron is expected to generate 70.25 times less return on investment than Bolsa Mexicana. But when comparing it to its historical volatility, Textron is 495.59 times less risky than Bolsa Mexicana. It trades about 0.22 of its potential returns per unit of risk. Bolsa Mexicana de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,360  in Bolsa Mexicana de on September 24, 2024 and sell it today you would earn a total of  34.00  from holding Bolsa Mexicana de or generate 1.01% return on investment over 90 days.

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

Textron  vs.  Bolsa Mexicana de

Textron

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bolsa Mexicana de

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bolsa Mexicana de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Bolsa Mexicana is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Textron and Bolsa Mexicana

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

The idea behind Textron and Bolsa Mexicana de 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.