Correlation Between Best Buy and Grupo Industrial
Can any of the company-specific risk be diversified away by investing in both Best Buy and Grupo Industrial 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 Best Buy and Grupo Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Best Buy Co and Grupo Industrial Saltillo, you can compare the effects of market volatilities on Best Buy and Grupo Industrial 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 Best Buy with a short position of Grupo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Best Buy and Grupo Industrial.
Diversification Opportunities for Best Buy and Grupo Industrial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Best and Grupo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Best Buy Co and Grupo Industrial Saltillo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Industrial Saltillo and Best Buy 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 Best Buy Co are associated (or correlated) with Grupo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Industrial Saltillo has no effect on the direction of Best Buy i.e., Best Buy and Grupo Industrial go up and down completely randomly.
Pair Corralation between Best Buy and Grupo Industrial
Assuming the 90 days trading horizon Best Buy Co is expected to generate 0.41 times more return on investment than Grupo Industrial. However, Best Buy Co is 2.46 times less risky than Grupo Industrial. It trades about 0.21 of its potential returns per unit of risk. Grupo Industrial Saltillo is currently generating about 0.08 per unit of risk. If you would invest 174,000 in Best Buy Co on December 8, 2024 and sell it today you would earn a total of 6,000 from holding Best Buy Co or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Best Buy Co vs. Grupo Industrial Saltillo
Performance |
| Timeline |
| Best Buy |
| Grupo Industrial Saltillo |
Best Buy and Grupo Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Best Buy and Grupo Industrial
The main advantage of trading using opposite Best Buy and Grupo Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Best Buy position performs unexpectedly, Grupo Industrial 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 Industrial will offset losses from the drop in Grupo Industrial's long position.| Best Buy vs. Grupo Sports World | ||
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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