Correlation Between IPC MEXICO and Grupo Televisa

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Can any of the company-specific risk be diversified away by investing in both IPC MEXICO and Grupo Televisa 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 Grupo Televisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and Grupo Televisa SAB, you can compare the effects of market volatilities on IPC MEXICO and Grupo Televisa 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 Grupo Televisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Grupo Televisa.

Diversification Opportunities for IPC MEXICO and Grupo Televisa

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between IPC and Grupo is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB 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 Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and Grupo Televisa go up and down completely randomly.
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Pair Corralation between IPC MEXICO and Grupo Televisa

Assuming the 90 days trading horizon IPC MEXICO is expected to generate 0.29 times more return on investment than Grupo Televisa. However, IPC MEXICO is 3.44 times less risky than Grupo Televisa. It trades about -0.01 of its potential returns per unit of risk. Grupo Televisa SAB is currently generating about -0.05 per unit of risk. If you would invest  5,333,551  in IPC MEXICO on August 27, 2024 and sell it today you would lose (310,788) from holding IPC MEXICO or give up 5.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.84%
ValuesDaily Returns

IPC MEXICO  vs.  Grupo Televisa SAB

 Performance 
       Timeline  

IPC MEXICO and Grupo Televisa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IPC MEXICO and Grupo Televisa

The main advantage of trading using opposite IPC MEXICO and Grupo Televisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO position performs unexpectedly, Grupo Televisa 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 Televisa will offset losses from the drop in Grupo Televisa's long position.
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The idea behind IPC MEXICO and Grupo Televisa SAB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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