Correlation Between Falabella and Colbun
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By analyzing existing cross correlation between Falabella and Colbun, you can compare the effects of market volatilities on Falabella and Colbun 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 Falabella with a short position of Colbun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falabella and Colbun.
Diversification Opportunities for Falabella and Colbun
Excellent diversification
The 3 months correlation between Falabella and Colbun is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Falabella and Colbun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colbun and Falabella 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 Falabella are associated (or correlated) with Colbun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colbun has no effect on the direction of Falabella i.e., Falabella and Colbun go up and down completely randomly.
Pair Corralation between Falabella and Colbun
Assuming the 90 days trading horizon Falabella is expected to under-perform the Colbun. In addition to that, Falabella is 1.84 times more volatile than Colbun. It trades about -0.13 of its total potential returns per unit of risk. Colbun is currently generating about -0.04 per unit of volatility. If you would invest 12,061 in Colbun on August 28, 2024 and sell it today you would lose (86.00) from holding Colbun or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falabella vs. Colbun
Performance |
| Timeline |
| Falabella |
| Colbun |
Falabella and Colbun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falabella and Colbun
The main advantage of trading using opposite Falabella and Colbun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falabella position performs unexpectedly, Colbun 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 Colbun will offset losses from the drop in Colbun's long position.| Falabella vs. Empresas Copec SA | Falabella vs. LATAM Airlines Group | Falabella vs. Sociedad Qumica y | Falabella vs. Banco Santander Chile |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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