Correlation Between Financiera Independencia and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Financiera Independencia and ConocoPhillips 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 Financiera Independencia and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financiera Independencia SAB and ConocoPhillips, you can compare the effects of market volatilities on Financiera Independencia and ConocoPhillips 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 Financiera Independencia with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financiera Independencia and ConocoPhillips.
Diversification Opportunities for Financiera Independencia and ConocoPhillips
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Financiera and ConocoPhillips is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Financiera Independencia SAB and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Financiera Independencia 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 Financiera Independencia SAB are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Financiera Independencia i.e., Financiera Independencia and ConocoPhillips go up and down completely randomly.
Pair Corralation between Financiera Independencia and ConocoPhillips
Assuming the 90 days trading horizon Financiera Independencia SAB is expected to generate 0.22 times more return on investment than ConocoPhillips. However, Financiera Independencia SAB is 4.54 times less risky than ConocoPhillips. It trades about -0.22 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.12 per unit of risk. If you would invest 820.00 in Financiera Independencia SAB on September 13, 2024 and sell it today you would lose (20.00) from holding Financiera Independencia SAB or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financiera Independencia SAB vs. ConocoPhillips
Performance |
| Timeline |
| Financiera Independencia |
| ConocoPhillips |
Financiera Independencia and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financiera Independencia and ConocoPhillips
The main advantage of trading using opposite Financiera Independencia and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financiera Independencia position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.The idea behind Financiera Independencia SAB and ConocoPhillips 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.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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