Correlation Between Grupo Financiero and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero and Rio Tinto 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 Rio Tinto 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 Rio Tinto PLC, you can compare the effects of market volatilities on Grupo Financiero and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Rio Tinto.
Diversification Opportunities for Grupo Financiero and Rio Tinto
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grupo and Rio is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Rio Tinto go up and down completely randomly.
Pair Corralation between Grupo Financiero and Rio Tinto
Assuming the 90 days trading horizon Grupo Financiero Galicia is expected to under-perform the Rio Tinto. In addition to that, Grupo Financiero is 2.05 times more volatile than Rio Tinto PLC. It trades about -0.07 of its total potential returns per unit of risk. Rio Tinto PLC is currently generating about 0.1 per unit of volatility. If you would invest 905,000 in Rio Tinto PLC on November 28, 2024 and sell it today you would earn a total of 32,000 from holding Rio Tinto PLC or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Financiero Galicia vs. Rio Tinto PLC
Performance |
| Timeline |
| Grupo Financiero Galicia |
| Rio Tinto PLC |
Grupo Financiero and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Financiero and Rio Tinto
The main advantage of trading using opposite Grupo Financiero and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Grupo Financiero vs. Transportadora de Gas | Grupo Financiero vs. United States Steel | Grupo Financiero vs. Verizon Communications | Grupo Financiero vs. Compania de Transporte |
| Rio Tinto vs. Harmony Gold Mining | Rio Tinto vs. Telecom Argentina | Rio Tinto vs. Verizon Communications | Rio Tinto vs. Agrometal SAI |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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