Correlation Between Rio Tinto and Grupo Mxico
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Grupo Mxico 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 Rio Tinto and Grupo Mxico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto Group and Grupo Mxico SAB, you can compare the effects of market volatilities on Rio Tinto and Grupo Mxico 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 Rio Tinto with a short position of Grupo Mxico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Grupo Mxico.
Diversification Opportunities for Rio Tinto and Grupo Mxico
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rio and Grupo is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto Group and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB and Rio Tinto 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 Rio Tinto Group are associated (or correlated) with Grupo Mxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of Rio Tinto i.e., Rio Tinto and Grupo Mxico go up and down completely randomly.
Pair Corralation between Rio Tinto and Grupo Mxico
Assuming the 90 days trading horizon Rio Tinto is expected to generate 34.5 times less return on investment than Grupo Mxico. But when comparing it to its historical volatility, Rio Tinto Group is 2.34 times less risky than Grupo Mxico. It trades about 0.01 of its potential returns per unit of risk. Grupo Mxico SAB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Grupo Mxico SAB on September 23, 2024 and sell it today you would earn a total of 422.00 from holding Grupo Mxico SAB or generate 897.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto Group vs. Grupo Mxico SAB
Performance |
| Timeline |
| Rio Tinto Group |
| Grupo Mxico SAB |
Rio Tinto and Grupo Mxico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Grupo Mxico
The main advantage of trading using opposite Rio Tinto and Grupo Mxico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Grupo Mxico 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 Mxico will offset losses from the drop in Grupo Mxico's long position.| Rio Tinto vs. BHP Group Limited | Rio Tinto vs. BHP Group Limited | Rio Tinto vs. Rio Tinto Group | Rio Tinto vs. Vale SA |
| Grupo Mxico vs. BHP Group Limited | Grupo Mxico vs. BHP Group Limited | Grupo Mxico vs. Rio Tinto Group | Grupo Mxico vs. Rio Tinto Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |