Correlation Between LATAM Airlines and Grupo Empresas
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By analyzing existing cross correlation between LATAM Airlines Group and Grupo Empresas Navieras, you can compare the effects of market volatilities on LATAM Airlines and Grupo Empresas 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 LATAM Airlines with a short position of Grupo Empresas. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Grupo Empresas.
Diversification Opportunities for LATAM Airlines and Grupo Empresas
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LATAM and Grupo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Grupo Empresas Navieras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Empresas Navieras and LATAM Airlines 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 LATAM Airlines Group are associated (or correlated) with Grupo Empresas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Empresas Navieras has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Grupo Empresas go up and down completely randomly.
Pair Corralation between LATAM Airlines and Grupo Empresas
Assuming the 90 days trading horizon LATAM Airlines Group is expected to generate 2.58 times more return on investment than Grupo Empresas. However, LATAM Airlines is 2.58 times more volatile than Grupo Empresas Navieras. It trades about 0.12 of its potential returns per unit of risk. Grupo Empresas Navieras is currently generating about 0.27 per unit of risk. If you would invest 1,329 in LATAM Airlines Group on September 13, 2024 and sell it today you would earn a total of 56.00 from holding LATAM Airlines Group or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 63.64% |
| Values | Daily Returns |
LATAM Airlines Group vs. Grupo Empresas Navieras
Performance |
| Timeline |
| LATAM Airlines Group |
| Grupo Empresas Navieras |
LATAM Airlines and Grupo Empresas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Grupo Empresas
The main advantage of trading using opposite LATAM Airlines and Grupo Empresas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Grupo Empresas 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 Empresas will offset losses from the drop in Grupo Empresas' long position.| LATAM Airlines vs. Falabella | LATAM Airlines vs. Cencosud | LATAM Airlines vs. Enjoy SA | LATAM Airlines vs. Empresas Copec SA |
| Grupo Empresas vs. LATAM Airlines Group | Grupo Empresas vs. Banco de Credito | Grupo Empresas vs. Multiexport Foods SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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