Correlation Between Vista Energy, and Grupo Financiero

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

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

Diversification Opportunities for Vista Energy, and Grupo Financiero

0.8

Correlation Coefficient

Vista Energy,  Grupo Financiero

Very poor diversification

The 3 months correlation between Vista and Grupo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vista Energy, SAB and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia and Vista Energy, 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 Vista Energy, SAB are associated (or correlated) with Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of Vista Energy, i.e., Vista Energy, and Grupo Financiero go up and down completely randomly.

Pair Corralation between Vista Energy, and Grupo Financiero

Assuming the 90 days trading horizon Vista Energy, SAB is expected to under-perform the Grupo Financiero. But the stock apears to be less risky and, when comparing its historical volatility, Vista Energy, SAB is 1.06 times less risky than Grupo Financiero. The stock trades about -0.06 of its potential returns per unit of risk. The Grupo Financiero Galicia is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  745,000  in Grupo Financiero Galicia on December 30, 2024 and sell it today you would lose (14,000) from holding Grupo Financiero Galicia or give up 1.88% of portfolio value over 90 days.

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

Vista Energy, SAB  vs.  Grupo Financiero Galicia

Vista Energy, SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vista Energy, SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grupo Financiero Galicia

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vista Energy, and Grupo Financiero

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

The idea behind Vista Energy, SAB and Grupo Financiero Galicia 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.