Correlation Between Banco Macro and Nova Mentis
Can any of the company-specific risk be diversified away by investing in both Banco Macro and Nova Mentis 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 Banco Macro and Nova Mentis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Macro SA and Nova Mentis Life, you can compare the effects of market volatilities on Banco Macro and Nova Mentis 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 Banco Macro with a short position of Nova Mentis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Macro and Nova Mentis.
Diversification Opportunities for Banco Macro and Nova Mentis
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Nova is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Banco Macro SA and Nova Mentis Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Mentis Life and Banco Macro 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 Banco Macro SA are associated (or correlated) with Nova Mentis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Mentis Life has no effect on the direction of Banco Macro i.e., Banco Macro and Nova Mentis go up and down completely randomly.
Pair Corralation between Banco Macro and Nova Mentis
Considering the 90-day investment horizon Banco Macro SA is expected to under-perform the Nova Mentis. But the stock apears to be less risky and, when comparing its historical volatility, Banco Macro SA is 6.38 times less risky than Nova Mentis. The stock trades about -0.22 of its potential returns per unit of risk. The Nova Mentis Life is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3.16 in Nova Mentis Life on December 1, 2024 and sell it today you would earn a total of 5.84 from holding Nova Mentis Life or generate 184.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Macro SA vs. Nova Mentis Life
Performance |
| Timeline |
| Banco Macro SA |
| Nova Mentis Life |
Banco Macro and Nova Mentis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Macro and Nova Mentis
The main advantage of trading using opposite Banco Macro and Nova Mentis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Macro position performs unexpectedly, Nova Mentis 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 Nova Mentis will offset losses from the drop in Nova Mentis' long position.| Banco Macro vs. Grupo Supervielle SA | Banco Macro vs. BBVA Banco Frances | Banco Macro vs. Banco Bradesco SA | Banco Macro vs. Itau Unibanco Banco |
| Nova Mentis vs. Awakn Life Sciences | Nova Mentis vs. PsyBio Therapeutics Corp | Nova Mentis vs. HAVN Life Sciences | Nova Mentis vs. Wesana Health Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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