Correlation Between Grupo Hotelero and Baxter International
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero and Baxter International 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 Hotelero and Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and Baxter International, you can compare the effects of market volatilities on Grupo Hotelero and Baxter International 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 Hotelero with a short position of Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Baxter International.
Diversification Opportunities for Grupo Hotelero and Baxter International
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and Baxter is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International and Grupo Hotelero 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 Hotelero Santa are associated (or correlated) with Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Baxter International go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Baxter International
Assuming the 90 days trading horizon Grupo Hotelero Santa is expected to under-perform the Baxter International. In addition to that, Grupo Hotelero is 1.05 times more volatile than Baxter International. It trades about -0.26 of its total potential returns per unit of risk. Baxter International is currently generating about -0.23 per unit of volatility. If you would invest 69,528 in Baxter International on September 12, 2024 and sell it today you would lose (5,728) from holding Baxter International or give up 8.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Baxter International
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Baxter International |
Grupo Hotelero and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Baxter International
The main advantage of trading using opposite Grupo Hotelero and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| Grupo Hotelero vs. Grupo Profuturo SAB | Grupo Hotelero vs. Promotora y Operadora | Grupo Hotelero vs. Promotora y Operadora | Grupo Hotelero vs. The Select Sector |
| Baxter International vs. Verizon Communications | Baxter International vs. KB Home | Baxter International vs. Costco Wholesale | Baxter International vs. Grupo Hotelero Santa |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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