Correlation Between Grupo Bimbo and Grupo Financiero

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Can any of the company-specific risk be diversified away by investing in both Grupo Bimbo 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 Grupo Bimbo and Grupo Financiero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Bimbo SAB and Grupo Financiero Banorte, you can compare the effects of market volatilities on Grupo Bimbo 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 Grupo Bimbo with a short position of Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and Grupo Financiero.

Diversification Opportunities for Grupo Bimbo and Grupo Financiero

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Grupo and Grupo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Grupo Financiero Banorte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Banorte and Grupo Bimbo 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 Bimbo 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 Banorte has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Grupo Financiero go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Grupo Financiero

Assuming the 90 days trading horizon Grupo Bimbo SAB is expected to under-perform the Grupo Financiero. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Bimbo SAB is 1.01 times less risky than Grupo Financiero. The stock trades about -0.06 of its potential returns per unit of risk. The Grupo Financiero Banorte is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  16,855  in Grupo Financiero Banorte on November 5, 2024 and sell it today you would lose (2,535) from holding Grupo Financiero Banorte or give up 15.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Grupo Bimbo SAB  vs.  Grupo Financiero Banorte

 Performance 
       Timeline  
Grupo Bimbo SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Grupo Financiero Banorte 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Banorte are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Bimbo and Grupo Financiero Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Bimbo and Grupo Financiero

The main advantage of trading using opposite Grupo Bimbo and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Bimbo 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.
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The idea behind Grupo Bimbo SAB and Grupo Financiero Banorte 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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