Correlation Between Grupo Aval and Dave

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

Diversification Opportunities for Grupo Aval and Dave

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Grupo and Dave is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Dave Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Inc and Grupo Aval 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 Aval are associated (or correlated) with Dave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Inc has no effect on the direction of Grupo Aval i.e., Grupo Aval and Dave go up and down completely randomly.

Pair Corralation between Grupo Aval and Dave

Given the investment horizon of 90 days Grupo Aval is expected to generate 0.31 times more return on investment than Dave. However, Grupo Aval is 3.19 times less risky than Dave. It trades about -0.07 of its potential returns per unit of risk. Dave Inc is currently generating about -0.09 per unit of risk. If you would invest  604.00  in Grupo Aval on November 1, 2022 and sell it today you would lose (356.00)  from holding Grupo Aval or give up 58.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy87.32%
ValuesDaily Returns

Grupo Aval  vs.  Dave Inc

 Performance (%) 
       Timeline  
Grupo Aval 
Grupo Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Grupo Aval revealed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Price Channel

Dave Inc 
Dave Performance
0 of 100
Over the last 90 days Dave Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Dave is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Dave Price Channel

Grupo Aval and Dave Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Aval and Dave

The main advantage of trading using opposite Grupo Aval and Dave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, Dave 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 Dave will offset losses from the drop in Dave's long position.
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The idea behind Grupo Aval and Dave Inc 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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