Correlation Between United States and GMxico Transportes
Can any of the company-specific risk be diversified away by investing in both United States and GMxico Transportes 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 United States and GMxico Transportes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and GMxico Transportes SAB, you can compare the effects of market volatilities on United States and GMxico Transportes 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 United States with a short position of GMxico Transportes. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and GMxico Transportes.
Diversification Opportunities for United States and GMxico Transportes
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and GMxico is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB and United States 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 United States Steel are associated (or correlated) with GMxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of United States i.e., United States and GMxico Transportes go up and down completely randomly.
Pair Corralation between United States and GMxico Transportes
Given the investment horizon of 90 days United States Steel is expected to generate 2.47 times more return on investment than GMxico Transportes. However, United States is 2.47 times more volatile than GMxico Transportes SAB. It trades about 0.13 of its potential returns per unit of risk. GMxico Transportes SAB is currently generating about -0.09 per unit of risk. If you would invest 68,888 in United States Steel on November 3, 2024 and sell it today you would earn a total of 5,992 from holding United States Steel or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United States Steel vs. GMxico Transportes SAB
Performance |
| Timeline |
| United States Steel |
| GMxico Transportes SAB |
United States and GMxico Transportes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and GMxico Transportes
The main advantage of trading using opposite United States and GMxico Transportes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, GMxico Transportes 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 GMxico Transportes will offset losses from the drop in GMxico Transportes' long position.| United States vs. United Airlines Holdings | United States vs. Verizon Communications | United States vs. DXC Technology | United States vs. Grupo Sports World |
| GMxico Transportes vs. Verizon Communications | GMxico Transportes vs. Desarrolladora Homex SAB | GMxico Transportes vs. Micron Technology | GMxico Transportes vs. Prudential Financial |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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