Correlation Between Grupo Mxico and Decade Resources
Can any of the company-specific risk be diversified away by investing in both Grupo Mxico and Decade Resources 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 Mxico and Decade Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Mxico SAB and Decade Resources, you can compare the effects of market volatilities on Grupo Mxico and Decade Resources 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 Mxico with a short position of Decade Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mxico and Decade Resources.
Diversification Opportunities for Grupo Mxico and Decade Resources
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Grupo and Decade is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and Decade Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decade Resources and Grupo Mxico 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 Mxico SAB are associated (or correlated) with Decade Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decade Resources has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and Decade Resources go up and down completely randomly.
Pair Corralation between Grupo Mxico and Decade Resources
Assuming the 90 days horizon Grupo Mxico SAB is expected to under-perform the Decade Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Grupo Mxico SAB is 4.24 times less risky than Decade Resources. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Decade Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Decade Resources on September 1, 2024 and sell it today you would lose (0.40) from holding Decade Resources or give up 11.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Mxico SAB vs. Decade Resources
Performance |
| Timeline |
| Grupo Mxico SAB |
| Decade Resources |
Grupo Mxico and Decade Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Mxico and Decade Resources
The main advantage of trading using opposite Grupo Mxico and Decade Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Mxico position performs unexpectedly, Decade Resources 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 Decade Resources will offset losses from the drop in Decade Resources' long position.| Grupo Mxico vs. ATT Inc | Grupo Mxico vs. Merck Company | Grupo Mxico vs. Walt Disney | Grupo Mxico vs. Caterpillar |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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