Correlation Between IPC MEXICO and Novartis
Can any of the company-specific risk be diversified away by investing in both IPC MEXICO and Novartis 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 IPC MEXICO and Novartis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and Novartis AG, you can compare the effects of market volatilities on IPC MEXICO and Novartis 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 IPC MEXICO with a short position of Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Novartis.
Diversification Opportunities for IPC MEXICO and Novartis
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between IPC and Novartis is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Novartis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG and IPC MEXICO 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 IPC MEXICO are associated (or correlated) with Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and Novartis go up and down completely randomly.
Pair Corralation between IPC MEXICO and Novartis
Assuming the 90 days trading horizon IPC MEXICO is expected to generate 0.63 times more return on investment than Novartis. However, IPC MEXICO is 1.58 times less risky than Novartis. It trades about -0.02 of its potential returns per unit of risk. Novartis AG is currently generating about -0.24 per unit of risk. If you would invest 5,022,240 in IPC MEXICO on September 19, 2024 and sell it today you would lose (27,088) from holding IPC MEXICO or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
IPC MEXICO vs. Novartis AG
Performance |
| Timeline |
IPC MEXICO and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
IPC MEXICO
Pair trading matchups for IPC MEXICO
Novartis AG
Pair trading matchups for Novartis
Pair Trading with IPC MEXICO and Novartis
The main advantage of trading using opposite IPC MEXICO and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' long position.| IPC MEXICO vs. Lloyds Banking Group | IPC MEXICO vs. McEwen Mining | IPC MEXICO vs. Micron Technology | IPC MEXICO vs. Delta Air Lines |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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