Correlation Between Sony and INVEX Controladora
Can any of the company-specific risk be diversified away by investing in both Sony and INVEX Controladora 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 Sony and INVEX Controladora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and INVEX Controladora SAB, you can compare the effects of market volatilities on Sony and INVEX Controladora 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 Sony with a short position of INVEX Controladora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and INVEX Controladora.
Diversification Opportunities for Sony and INVEX Controladora
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sony and INVEX is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and INVEX Controladora SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVEX Controladora SAB and Sony 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 Sony Group are associated (or correlated) with INVEX Controladora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVEX Controladora SAB has no effect on the direction of Sony i.e., Sony and INVEX Controladora go up and down completely randomly.
Pair Corralation between Sony and INVEX Controladora
Assuming the 90 days trading horizon Sony Group is expected to generate 3.81 times more return on investment than INVEX Controladora. However, Sony is 3.81 times more volatile than INVEX Controladora SAB. It trades about 0.09 of its potential returns per unit of risk. INVEX Controladora SAB is currently generating about 0.05 per unit of risk. If you would invest 30,160 in Sony Group on September 14, 2024 and sell it today you would earn a total of 14,340 from holding Sony Group or generate 47.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.38% |
| Values | Daily Returns |
Sony Group vs. INVEX Controladora SAB
Performance |
| Timeline |
| Sony Group |
| INVEX Controladora SAB |
Sony and INVEX Controladora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and INVEX Controladora
The main advantage of trading using opposite Sony and INVEX Controladora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, INVEX Controladora 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 INVEX Controladora will offset losses from the drop in INVEX Controladora's long position.The idea behind Sony Group and INVEX Controladora 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.| INVEX Controladora vs. McEwen Mining | INVEX Controladora vs. Verizon Communications | INVEX Controladora vs. Lloyds Banking Group | INVEX Controladora 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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