Correlation Between Grupo Concesionario and Pioneer Natural

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Can any of the company-specific risk be diversified away by investing in both Grupo Concesionario and Pioneer Natural 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 Concesionario and Pioneer Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Concesionario Del and Pioneer Natural Resources, you can compare the effects of market volatilities on Grupo Concesionario and Pioneer Natural 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 Concesionario with a short position of Pioneer Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Concesionario and Pioneer Natural.

Diversification Opportunities for Grupo Concesionario and Pioneer Natural

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Grupo and Pioneer is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Concesionario Del and Pioneer Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Natural Resources and Grupo Concesionario 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 Concesionario Del are associated (or correlated) with Pioneer Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Natural Resources has no effect on the direction of Grupo Concesionario i.e., Grupo Concesionario and Pioneer Natural go up and down completely randomly.

Pair Corralation between Grupo Concesionario and Pioneer Natural

Assuming the 90 days trading horizon Grupo Concesionario Del is expected to generate 2.94 times more return on investment than Pioneer Natural. However, Grupo Concesionario is 2.94 times more volatile than Pioneer Natural Resources. It trades about 0.24 of its potential returns per unit of risk. Pioneer Natural Resources is currently generating about 0.07 per unit of risk. If you would invest  10,775  in Grupo Concesionario Del on December 29, 2023 and sell it today you would earn a total of  96,275  from holding Grupo Concesionario Del or generate 893.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy97.98%
ValuesDaily Returns

Grupo Concesionario Del  vs.  Pioneer Natural Resources

 Performance 
       Timeline  
Grupo Concesionario Del 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Concesionario Del are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Concesionario sustained solid returns over the last few months and may actually be approaching a breakup point.
Pioneer Natural Resources 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Natural Resources are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Pioneer Natural exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grupo Concesionario and Pioneer Natural Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Concesionario and Pioneer Natural

The main advantage of trading using opposite Grupo Concesionario and Pioneer Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Concesionario position performs unexpectedly, Pioneer Natural 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 Pioneer Natural will offset losses from the drop in Pioneer Natural's long position.
The idea behind Grupo Concesionario Del and Pioneer Natural Resources 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.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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