Correlation Between Gogo and America Movil

Can any of the company-specific risk be diversified away by investing in both Gogo and America Movil 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 Gogo and America Movil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gogo Inc and America Movil SAB, you can compare the effects of market volatilities on Gogo and America Movil 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 Gogo with a short position of America Movil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gogo and America Movil.

Diversification Opportunities for Gogo and America Movil

-0.5

Correlation Coefficient

Gogo  America Movil

Very good diversification

The 3 months correlation between Gogo and America is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gogo Inc and America Movil SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Movil SAB and Gogo 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 Gogo Inc are associated (or correlated) with America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Movil SAB has no effect on the direction of Gogo i.e., Gogo and America Movil go up and down completely randomly.

Pair Corralation between Gogo and America Movil

Given the investment horizon of 90 days Gogo Inc is expected to generate 1.54 times more return on investment than America Movil. However, Gogo is 1.54 times more volatile than America Movil SAB. It trades about -0.03 of its potential returns per unit of risk. America Movil SAB is currently generating about -0.12 per unit of risk. If you would invest  855.00  in Gogo Inc on January 20, 2024 and sell it today you would lose (20.00) from holding Gogo Inc or give up 2.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gogo Inc  vs.  America Movil SAB

Gogo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gogo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Gogo is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

America Movil SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Movil SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, America Movil is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gogo and America Movil

The main advantage of trading using opposite Gogo and America Movil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gogo position performs unexpectedly, America Movil 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 America Movil will offset losses from the drop in America Movil's long position.

The idea behind Gogo Inc and America Movil SAB 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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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.