Correlation Between Almacenes Xito and Vanguard Sumer

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Can any of the company-specific risk be diversified away by investing in both Almacenes Xito and Vanguard Sumer 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 Almacenes Xito and Vanguard Sumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Almacenes xito SA and Vanguard Sumer Discretionary, you can compare the effects of market volatilities on Almacenes Xito and Vanguard Sumer 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 Almacenes Xito with a short position of Vanguard Sumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almacenes Xito and Vanguard Sumer.

Diversification Opportunities for Almacenes Xito and Vanguard Sumer

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Almacenes and Vanguard is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Almacenes xito SA and Vanguard Sumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Sumer Discr and Almacenes Xito 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 Almacenes xito SA are associated (or correlated) with Vanguard Sumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Sumer Discr has no effect on the direction of Almacenes Xito i.e., Almacenes Xito and Vanguard Sumer go up and down completely randomly.

Pair Corralation between Almacenes Xito and Vanguard Sumer

Given the investment horizon of 90 days Almacenes xito SA is expected to under-perform the Vanguard Sumer. In addition to that, Almacenes Xito is 1.51 times more volatile than Vanguard Sumer Discretionary. It trades about -0.28 of its total potential returns per unit of risk. Vanguard Sumer Discretionary is currently generating about 0.36 per unit of volatility. If you would invest  17,617  in Vanguard Sumer Discretionary on August 27, 2024 and sell it today you would earn a total of  1,730  from holding Vanguard Sumer Discretionary or generate 9.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Almacenes xito SA  vs.  Vanguard Sumer Discretionary

 Performance 
       Timeline  
Almacenes xito SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Almacenes xito SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Vanguard Sumer Discr 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Sumer Discretionary are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Sumer showed solid returns over the last few months and may actually be approaching a breakup point.

Almacenes Xito and Vanguard Sumer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Almacenes Xito and Vanguard Sumer

The main advantage of trading using opposite Almacenes Xito and Vanguard Sumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Almacenes Xito position performs unexpectedly, Vanguard Sumer 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 Vanguard Sumer will offset losses from the drop in Vanguard Sumer's long position.
The idea behind Almacenes xito SA and Vanguard Sumer Discretionary pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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