Correlation Between RETAIL FOOD and Grupo Aval
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and Grupo Aval 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 RETAIL FOOD and Grupo Aval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Grupo Aval Acciones, you can compare the effects of market volatilities on RETAIL FOOD and Grupo Aval 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 RETAIL FOOD with a short position of Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Grupo Aval.
Diversification Opportunities for RETAIL FOOD and Grupo Aval
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RETAIL and Grupo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Grupo Aval Acciones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval Acciones and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval Acciones has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and Grupo Aval go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Grupo Aval
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to generate 1.35 times more return on investment than Grupo Aval. However, RETAIL FOOD is 1.35 times more volatile than Grupo Aval Acciones. It trades about 0.01 of its potential returns per unit of risk. Grupo Aval Acciones is currently generating about 0.02 per unit of risk. If you would invest 4.20 in RETAIL FOOD GROUP on September 4, 2024 and sell it today you would lose (0.05) from holding RETAIL FOOD GROUP or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Grupo Aval Acciones
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Grupo Aval Acciones |
RETAIL FOOD and Grupo Aval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Grupo Aval
The main advantage of trading using opposite RETAIL FOOD and Grupo Aval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, Grupo Aval 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 Grupo Aval will offset losses from the drop in Grupo Aval's long position.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
| Grupo Aval vs. RETAIL FOOD GROUP | Grupo Aval vs. SYSTEMAIR AB | Grupo Aval vs. Burlington Stores | Grupo Aval vs. Ross Stores |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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