Correlation Between Vale SA and Grupo Mxico
Can any of the company-specific risk be diversified away by investing in both Vale SA and Grupo Mxico 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 Vale SA and Grupo Mxico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Grupo Mxico SAB, you can compare the effects of market volatilities on Vale SA and Grupo Mxico 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 Vale SA with a short position of Grupo Mxico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Grupo Mxico.
Diversification Opportunities for Vale SA and Grupo Mxico
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vale and Grupo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB and Vale SA 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 Vale SA are associated (or correlated) with Grupo Mxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of Vale SA i.e., Vale SA and Grupo Mxico go up and down completely randomly.
Pair Corralation between Vale SA and Grupo Mxico
Assuming the 90 days trading horizon Vale SA is expected to under-perform the Grupo Mxico. But the stock apears to be less risky and, when comparing its historical volatility, Vale SA is 2.22 times less risky than Grupo Mxico. The stock trades about -0.05 of its potential returns per unit of risk. The Grupo Mxico SAB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 264.00 in Grupo Mxico SAB on September 24, 2024 and sell it today you would earn a total of 205.00 from holding Grupo Mxico SAB or generate 77.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale SA vs. Grupo Mxico SAB
Performance |
| Timeline |
| Vale SA |
| Grupo Mxico SAB |
Vale SA and Grupo Mxico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Grupo Mxico
The main advantage of trading using opposite Vale SA and Grupo Mxico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Grupo Mxico 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 Mxico will offset losses from the drop in Grupo Mxico's long position.| Vale SA vs. AIR LIQUIDE ADR | Vale SA vs. SYSTEMAIR AB | Vale SA vs. SEALED AIR | Vale SA vs. Harmony Gold Mining |
| Grupo Mxico vs. BHP Group Limited | Grupo Mxico vs. BHP Group Limited | Grupo Mxico vs. Rio Tinto Group | Grupo Mxico vs. Rio Tinto Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |