Correlation Between Ternium SA and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both Ternium SA and SPDR Barclays 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 Ternium SA and SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and SPDR Barclays Intermediate, you can compare the effects of market volatilities on Ternium SA and SPDR Barclays 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 Ternium SA with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and SPDR Barclays.
Diversification Opportunities for Ternium SA and SPDR Barclays
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ternium and SPDR is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and SPDR Barclays Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Interm and Ternium SA 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 Ternium SA ADR are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Interm has no effect on the direction of Ternium SA i.e., Ternium SA and SPDR Barclays go up and down completely randomly.
Pair Corralation between Ternium SA and SPDR Barclays
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to generate 6.4 times more return on investment than SPDR Barclays. However, Ternium SA is 6.4 times more volatile than SPDR Barclays Intermediate. It trades about 0.01 of its potential returns per unit of risk. SPDR Barclays Intermediate is currently generating about 0.03 per unit of risk. If you would invest 4,222 in Ternium SA ADR on December 30, 2023 and sell it today you would lose (60.00) from holding Ternium SA ADR or give up 1.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ternium SA ADR vs. SPDR Barclays Intermediate
Performance |
Timeline |
Ternium SA ADR |
SPDR Barclays Interm |
Ternium SA and SPDR Barclays Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ternium SA and SPDR Barclays
The main advantage of trading using opposite Ternium SA and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' long position.Ternium SA vs. Alcoa Corp | Ternium SA vs. ArcelorMittal SA ADR | Ternium SA vs. AdvanSix | Ternium SA vs. United States Steel |
SPDR Barclays vs. IShares 5 10 Year | SPDR Barclays vs. International Business Machines | SPDR Barclays vs. Barloworld Ltd ADR | SPDR Barclays vs. Morningstar Unconstrained Allocation |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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