Correlation Between Grupo Sports and Hoteles City
Can any of the company-specific risk be diversified away by investing in both Grupo Sports and Hoteles City 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 Grupo Sports and Hoteles City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Sports World and Hoteles City Express, you can compare the effects of market volatilities on Grupo Sports and Hoteles City 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 Grupo Sports with a short position of Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and Hoteles City.
Diversification Opportunities for Grupo Sports and Hoteles City
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grupo and Hoteles is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express and Grupo Sports 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 Grupo Sports World are associated (or correlated) with Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Grupo Sports i.e., Grupo Sports and Hoteles City go up and down completely randomly.
Pair Corralation between Grupo Sports and Hoteles City
Assuming the 90 days trading horizon Grupo Sports World is expected to under-perform the Hoteles City. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Sports World is 1.94 times less risky than Hoteles City. The stock trades about -0.34 of its potential returns per unit of risk. The Hoteles City Express is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 450.00 in Hoteles City Express on October 20, 2024 and sell it today you would lose (9.00) from holding Hoteles City Express or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Sports World vs. Hoteles City Express
Performance |
| Timeline |
| Grupo Sports World |
| Hoteles City Express |
Grupo Sports and Hoteles City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Sports and Hoteles City
The main advantage of trading using opposite Grupo Sports and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Sports position performs unexpectedly, Hoteles City 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 Hoteles City will offset losses from the drop in Hoteles City's long position.| Grupo Sports vs. Cognizant Technology Solutions | Grupo Sports vs. The Home Depot | Grupo Sports vs. Verizon Communications | Grupo Sports vs. United Airlines Holdings |
| Hoteles City vs. Controladora Vuela Compaa | Hoteles City vs. Alsea SAB de | Hoteles City vs. Nemak S A | Hoteles City vs. Grupo Comercial Chedraui |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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