Correlation Between Grupo Aeroportuario and Corporacion America
Can any of the company-specific risk be diversified away by investing in both Grupo Aeroportuario and Corporacion America 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 Aeroportuario and Corporacion America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aeroportuario del and Corporacion America Airports, you can compare the effects of market volatilities on Grupo Aeroportuario and Corporacion America 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 Aeroportuario with a short position of Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aeroportuario and Corporacion America.
Diversification Opportunities for Grupo Aeroportuario and Corporacion America
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and Corporacion is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America and Grupo Aeroportuario 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 Aeroportuario del are associated (or correlated) with Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and Corporacion America go up and down completely randomly.
Pair Corralation between Grupo Aeroportuario and Corporacion America
Considering the 90-day investment horizon Grupo Aeroportuario is expected to generate 1.38 times less return on investment than Corporacion America. But when comparing it to its historical volatility, Grupo Aeroportuario del is 1.04 times less risky than Corporacion America. It trades about 0.18 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,502 in Corporacion America Airports on January 19, 2024 and sell it today you would earn a total of 153.80 from holding Corporacion America Airports or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Grupo Aeroportuario del vs. Corporacion America Airports
Performance |
| Timeline |
| Grupo Aeroportuario del |
| Corporacion America |
Grupo Aeroportuario and Corporacion America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aeroportuario and Corporacion America
The main advantage of trading using opposite Grupo Aeroportuario and Corporacion America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aeroportuario position performs unexpectedly, Corporacion America 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 Corporacion America will offset losses from the drop in Corporacion America's long position.| Grupo Aeroportuario vs. Direxion Airline Shares | Grupo Aeroportuario vs. JetAI Merger Consideration | Grupo Aeroportuario vs. JetAI Inc | Grupo Aeroportuario vs. Joby Aviation |
| Corporacion America vs. Direxion Airline Shares | Corporacion America vs. JetAI Merger Consideration | Corporacion America vs. JetAI Inc | Corporacion America vs. Joby Aviation |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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