Correlation Between Promotora and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Promotora and IShares Trust 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 Promotora and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and iShares Trust , you can compare the effects of market volatilities on Promotora and IShares Trust 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 Promotora with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and IShares Trust.
Diversification Opportunities for Promotora and IShares Trust
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Promotora and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Promotora 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 Promotora y Operadora are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Promotora i.e., Promotora and IShares Trust go up and down completely randomly.
Pair Corralation between Promotora and IShares Trust
Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 1.33 times more return on investment than IShares Trust. However, Promotora is 1.33 times more volatile than iShares Trust . It trades about 0.21 of its potential returns per unit of risk. iShares Trust is currently generating about 0.2 per unit of risk. If you would invest 17,659 in Promotora y Operadora on August 31, 2024 and sell it today you would earn a total of 1,150 from holding Promotora y Operadora or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. iShares Trust
Performance |
| Timeline |
| Promotora y Operadora |
| iShares Trust |
Promotora and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and IShares Trust
The main advantage of trading using opposite Promotora and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Kimberly Clark de Mxico |
| IShares Trust vs. Promotora y Operadora | IShares Trust vs. UnitedHealth Group Incorporated | IShares Trust vs. Qulitas Controladora SAB | IShares Trust vs. Hoteles City Express |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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