Correlation Between Grupo Financiero and Metrogas
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero and Metrogas 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 Grupo Financiero and Metrogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and Metrogas SA, you can compare the effects of market volatilities on Grupo Financiero and Metrogas 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 Grupo Financiero with a short position of Metrogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Metrogas.
Diversification Opportunities for Grupo Financiero and Metrogas
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Metrogas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Metrogas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrogas SA and Grupo Financiero 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 Grupo Financiero Galicia are associated (or correlated) with Metrogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrogas SA has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Metrogas go up and down completely randomly.
Pair Corralation between Grupo Financiero and Metrogas
Assuming the 90 days trading horizon Grupo Financiero is expected to generate 4.25 times less return on investment than Metrogas. But when comparing it to its historical volatility, Grupo Financiero Galicia is 1.22 times less risky than Metrogas. It trades about 0.2 of its potential returns per unit of risk. Metrogas SA is currently generating about 0.7 of returns per unit of risk over similar time horizon. If you would invest 107,000 in Metrogas SA on August 30, 2024 and sell it today you would earn a total of 113,000 from holding Metrogas SA or generate 105.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Financiero Galicia vs. Metrogas SA
Performance |
| Timeline |
| Grupo Financiero Galicia |
| Metrogas SA |
Grupo Financiero and Metrogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Financiero and Metrogas
The main advantage of trading using opposite Grupo Financiero and Metrogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero position performs unexpectedly, Metrogas 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 Metrogas will offset losses from the drop in Metrogas' long position.| Grupo Financiero vs. Banco Bradesco DRC | Grupo Financiero vs. Vista Energy, SAB | Grupo Financiero vs. United States Steel | Grupo Financiero vs. Central Puerto SA |
| Metrogas vs. Agrometal SAI | Metrogas vs. Transportadora de Gas | Metrogas vs. Compania de Transporte | Metrogas vs. Harmony Gold Mining |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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