Correlation Between Grupo Aval and LUMI GRUPPEN
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and LUMI GRUPPEN 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 Aval and LUMI GRUPPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval Acciones and LUMI GRUPPEN AS, you can compare the effects of market volatilities on Grupo Aval and LUMI GRUPPEN 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 Aval with a short position of LUMI GRUPPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and LUMI GRUPPEN.
Diversification Opportunities for Grupo Aval and LUMI GRUPPEN
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and LUMI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS and Grupo Aval 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 Aval Acciones are associated (or correlated) with LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of Grupo Aval i.e., Grupo Aval and LUMI GRUPPEN go up and down completely randomly.
Pair Corralation between Grupo Aval and LUMI GRUPPEN
Assuming the 90 days trading horizon Grupo Aval is expected to generate 5.06 times less return on investment than LUMI GRUPPEN. But when comparing it to its historical volatility, Grupo Aval Acciones is 5.53 times less risky than LUMI GRUPPEN. It trades about 0.15 of its potential returns per unit of risk. LUMI GRUPPEN AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 70.00 in LUMI GRUPPEN AS on October 12, 2024 and sell it today you would earn a total of 41.00 from holding LUMI GRUPPEN AS or generate 58.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval Acciones vs. LUMI GRUPPEN AS
Performance |
| Timeline |
| Grupo Aval Acciones |
| LUMI GRUPPEN AS |
Grupo Aval and LUMI GRUPPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and LUMI GRUPPEN
The main advantage of trading using opposite Grupo Aval and LUMI GRUPPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, LUMI GRUPPEN 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 LUMI GRUPPEN will offset losses from the drop in LUMI GRUPPEN's long position.| Grupo Aval vs. Pembina Pipeline Corp | Grupo Aval vs. Coor Service Management | Grupo Aval vs. Kingdee International Software | Grupo Aval vs. BORR DRILLING NEW |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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