Correlation Between Compania Cervecerias and Magnite
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Magnite 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 Compania Cervecerias and Magnite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Cervecerias Unidas and Magnite, you can compare the effects of market volatilities on Compania Cervecerias and Magnite 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 Compania Cervecerias with a short position of Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Magnite.
Diversification Opportunities for Compania Cervecerias and Magnite
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compania and Magnite is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite and Compania Cervecerias 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 Compania Cervecerias Unidas are associated (or correlated) with Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Magnite go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Magnite
Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.32 times more return on investment than Magnite. However, Compania Cervecerias Unidas is 3.09 times less risky than Magnite. It trades about 0.04 of its potential returns per unit of risk. Magnite is currently generating about -0.07 per unit of risk. If you would invest 1,160 in Compania Cervecerias Unidas on October 24, 2024 and sell it today you would earn a total of 6.00 from holding Compania Cervecerias Unidas or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. Magnite
Performance |
| Timeline |
| Compania Cervecerias |
| Magnite |
Compania Cervecerias and Magnite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and Magnite
The main advantage of trading using opposite Compania Cervecerias and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.| Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Ambev SA ADR | Compania Cervecerias vs. Molson Coors Brewing |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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