Correlation Between Grupo Televisa and DOW

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

Diversification Opportunities for Grupo Televisa and DOW

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Grupo and DOW is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa Sa and DOW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW and Grupo Televisa 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 Televisa Sa are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Grupo Televisa i.e., Grupo Televisa and DOW go up and down completely randomly.
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Pair Corralation between Grupo Televisa and DOW

Assuming the 90 days horizon Grupo Televisa Sa is expected to under-perform the DOW. In addition to that, Grupo Televisa is 1.57 times more volatile than DOW. It trades about -0.22 of its total potential returns per unit of risk. DOW is currently generating about 0.46 per unit of volatility. If you would invest  3,107,261  in DOW on May 17, 2022 and sell it today you would earn a total of  268,844  from holding DOW or generate 8.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Grupo Televisa Sa  vs.  DOW

 Performance (%) 
       Timeline  

Grupo Televisa and DOW Volatility Contrast

   Predicted Return Density   
       Returns  

DOW

Pair trading matchups for DOW

United Rentals vs. DOW
Qualcomm vs. DOW
Sentinelone Inc vs. DOW
Equinix vs. DOW
Amazon vs. DOW
Aspen Technology vs. DOW
Visa vs. DOW
Oracle vs. DOW
Skyworks Solutions vs. DOW
Wex vs. DOW
Tenneco Automotive vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.

Pair Trading with Grupo Televisa and DOW

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

DOW

Pair trading matchups for DOW

Aspen Technology vs. DOW
United Rentals vs. DOW
Sentinelone Inc vs. DOW
Boeing vs. DOW
Ford vs. DOW
Wex vs. DOW
Walker Dunlop vs. DOW
Tenneco Automotive vs. DOW
Visa vs. DOW
Qualcomm vs. DOW
Salesforce vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.
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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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