Correlation Between GMxico Transportes and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both GMxico Transportes and MercadoLibre 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 GMxico Transportes and MercadoLibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMxico Transportes SAB and MercadoLibre, you can compare the effects of market volatilities on GMxico Transportes and MercadoLibre 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 GMxico Transportes with a short position of MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMxico Transportes and MercadoLibre.
Diversification Opportunities for GMxico Transportes and MercadoLibre
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between GMxico and MercadoLibre is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre and GMxico Transportes 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 GMxico Transportes SAB are associated (or correlated) with MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of GMxico Transportes i.e., GMxico Transportes and MercadoLibre go up and down completely randomly.
Pair Corralation between GMxico Transportes and MercadoLibre
Assuming the 90 days trading horizon GMxico Transportes SAB is expected to under-perform the MercadoLibre. But the stock apears to be less risky and, when comparing its historical volatility, GMxico Transportes SAB is 1.49 times less risky than MercadoLibre. The stock trades about -0.01 of its potential returns per unit of risk. The MercadoLibre is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,200,000 in MercadoLibre on September 1, 2024 and sell it today you would earn a total of 1,835,295 from holding MercadoLibre or generate 83.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
GMxico Transportes SAB vs. MercadoLibre
Performance |
| Timeline |
| GMxico Transportes SAB |
| MercadoLibre |
GMxico Transportes and MercadoLibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMxico Transportes and MercadoLibre
The main advantage of trading using opposite GMxico Transportes and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMxico Transportes position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.| GMxico Transportes vs. Cognizant Technology Solutions | GMxico Transportes vs. McEwen Mining | GMxico Transportes vs. DXC Technology | GMxico Transportes vs. Micron Technology |
| MercadoLibre vs. Samsung Electronics Co | MercadoLibre vs. Ameriprise Financial | MercadoLibre vs. Southern Copper | MercadoLibre vs. Southwest Airlines |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |