Correlation Between Grupo Mxico and BHP Group
Can any of the company-specific risk be diversified away by investing in both Grupo Mxico and BHP Group 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 Grupo Mxico and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Mxico SAB and BHP Group Limited, you can compare the effects of market volatilities on Grupo Mxico and BHP Group 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 Grupo Mxico with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mxico and BHP Group.
Diversification Opportunities for Grupo Mxico and BHP Group
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and BHP is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and Grupo Mxico 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 Grupo Mxico SAB are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and BHP Group go up and down completely randomly.
Pair Corralation between Grupo Mxico and BHP Group
Assuming the 90 days horizon Grupo Mxico SAB is expected to generate 2.74 times more return on investment than BHP Group. However, Grupo Mxico is 2.74 times more volatile than BHP Group Limited. It trades about 0.12 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.03 per unit of risk. If you would invest 264.00 in Grupo Mxico SAB on September 24, 2024 and sell it today you would earn a total of 205.00 from holding Grupo Mxico SAB or generate 77.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Mxico SAB vs. BHP Group Limited
Performance |
| Timeline |
| Grupo Mxico SAB |
| BHP Group Limited |
Grupo Mxico and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Mxico and BHP Group
The main advantage of trading using opposite Grupo Mxico and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Mxico position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Grupo Mxico vs. BHP Group Limited | Grupo Mxico vs. BHP Group Limited | Grupo Mxico vs. Rio Tinto Group | Grupo Mxico vs. Rio Tinto Group |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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