Correlation Between Banco Macro and Universal Power
Can any of the company-specific risk be diversified away by investing in both Banco Macro and Universal Power 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 Universal Power 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 Universal Power Industry, you can compare the effects of market volatilities on Banco Macro and Universal Power 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 Universal Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Macro and Universal Power.
Diversification Opportunities for Banco Macro and Universal Power
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Universal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Banco Macro SA and Universal Power Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Power Industry 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 Universal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Power Industry has no effect on the direction of Banco Macro i.e., Banco Macro and Universal Power go up and down completely randomly.
Pair Corralation between Banco Macro and Universal Power
Considering the 90-day investment horizon Banco Macro is expected to generate 8.65 times less return on investment than Universal Power. But when comparing it to its historical volatility, Banco Macro SA is 5.3 times less risky than Universal Power. It trades about 0.05 of its potential returns per unit of risk. Universal Power Industry is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.36 in Universal Power Industry on November 27, 2024 and sell it today you would earn a total of 0.05 from holding Universal Power Industry or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.06% |
| Values | Daily Returns |
Banco Macro SA vs. Universal Power Industry
Performance |
| Timeline |
| Banco Macro SA |
| Universal Power Industry |
Banco Macro and Universal Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Macro and Universal Power
The main advantage of trading using opposite Banco Macro and Universal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Macro position performs unexpectedly, Universal Power 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 Universal Power will offset losses from the drop in Universal Power's 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 |
| Universal Power vs. National Health Scan | Universal Power vs. Protect Pharmaceutical | Universal Power vs. World Oil Group | Universal Power vs. Steel Partners 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |