Correlation Between Grupo Hotelero and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero and Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan, you can compare the effects of market volatilities on Grupo Hotelero and Freeport McMoRan 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 Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Freeport McMoRan.
Diversification Opportunities for Grupo Hotelero and Freeport McMoRan
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grupo and Freeport is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Freeport McMoRan go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Freeport McMoRan
Assuming the 90 days trading horizon Grupo Hotelero is expected to generate 1.49 times less return on investment than Freeport McMoRan. But when comparing it to its historical volatility, Grupo Hotelero Santa is 1.14 times less risky than Freeport McMoRan. It trades about 0.02 of its potential returns per unit of risk. Freeport McMoRan is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 73,962 in Freeport McMoRan on September 3, 2024 and sell it today you would earn a total of 13,881 from holding Freeport McMoRan or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Freeport McMoRan
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Freeport McMoRan |
Grupo Hotelero and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Freeport McMoRan
The main advantage of trading using opposite Grupo Hotelero and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| Grupo Hotelero vs. Axtel SAB de | Grupo Hotelero vs. Fomento Econmico Mexicano | Grupo Hotelero vs. Lloyds Banking Group | Grupo Hotelero vs. Apple Inc |
| Freeport McMoRan vs. Applied Materials | Freeport McMoRan vs. Verizon Communications | Freeport McMoRan vs. Grupo Hotelero Santa | Freeport McMoRan vs. Ameriprise Financial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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