Correlation Between Empresa Distribuidora and Grupo Financiero
Can any of the company-specific risk be diversified away by investing in both Empresa Distribuidora 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 Empresa Distribuidora and Grupo Financiero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Distribuidora y and Grupo Financiero Galicia, you can compare the effects of market volatilities on Empresa Distribuidora 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 Empresa Distribuidora with a short position of Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Distribuidora and Grupo Financiero.
Diversification Opportunities for Empresa Distribuidora and Grupo Financiero
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empresa and Grupo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia and Empresa Distribuidora 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 Empresa Distribuidora y 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 Galicia has no effect on the direction of Empresa Distribuidora i.e., Empresa Distribuidora and Grupo Financiero go up and down completely randomly.
Pair Corralation between Empresa Distribuidora and Grupo Financiero
Assuming the 90 days trading horizon Empresa Distribuidora y is expected to under-perform the Grupo Financiero. In addition to that, Empresa Distribuidora is 1.53 times more volatile than Grupo Financiero Galicia. It trades about -0.22 of its total potential returns per unit of risk. Grupo Financiero Galicia is currently generating about 0.14 per unit of volatility. If you would invest 724,000 in Grupo Financiero Galicia on October 20, 2024 and sell it today you would earn a total of 60,000 from holding Grupo Financiero Galicia or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Empresa Distribuidora y vs. Grupo Financiero Galicia
Performance |
| Timeline |
| Empresa Distribuidora |
| Grupo Financiero Galicia |
Empresa Distribuidora and Grupo Financiero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Distribuidora and Grupo Financiero
The main advantage of trading using opposite Empresa Distribuidora and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora 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.| Empresa Distribuidora vs. Central Puerto SA | Empresa Distribuidora vs. Enel Generacion Costanera | Empresa Distribuidora vs. Edesa Holding SA | Empresa Distribuidora vs. Empresa Distribuidora Electrica |
| Grupo Financiero vs. Banco Bradesco DRC | Grupo Financiero vs. Banco Santander Brasil | Grupo Financiero vs. Banco Santander Ro | Grupo Financiero vs. Central Puerto SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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