Correlation Between Fibra UNO and FibraHotel
Can any of the company-specific risk be diversified away by investing in both Fibra UNO and FibraHotel 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 Fibra UNO and FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fibra UNO and FibraHotel, you can compare the effects of market volatilities on Fibra UNO and FibraHotel 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 Fibra UNO with a short position of FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fibra UNO and FibraHotel.
Diversification Opportunities for Fibra UNO and FibraHotel
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fibra and FibraHotel is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fibra UNO and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and Fibra UNO 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 Fibra UNO are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Fibra UNO i.e., Fibra UNO and FibraHotel go up and down completely randomly.
Pair Corralation between Fibra UNO and FibraHotel
Assuming the 90 days trading horizon Fibra UNO is expected to under-perform the FibraHotel. But the stock apears to be less risky and, when comparing its historical volatility, Fibra UNO is 1.33 times less risky than FibraHotel. The stock trades about -0.15 of its potential returns per unit of risk. The FibraHotel is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 905.00 in FibraHotel on September 13, 2024 and sell it today you would lose (21.00) from holding FibraHotel or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fibra UNO vs. FibraHotel
Performance |
| Timeline |
| Fibra UNO |
| FibraHotel |
Fibra UNO and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fibra UNO and FibraHotel
The main advantage of trading using opposite Fibra UNO and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fibra UNO position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| Fibra UNO vs. Micron Technology | Fibra UNO vs. Cognizant Technology Solutions | Fibra UNO vs. United Airlines Holdings | Fibra UNO vs. Prudential Financial |
| FibraHotel vs. DXC Technology | FibraHotel vs. New Oriental Education | FibraHotel vs. Monster Beverage Corp | FibraHotel vs. Martin Marietta Materials |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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