Correlation Between Spotify Technology and Grupo Televisa

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

By analyzing existing cross correlation between Spotify Technology SA and Grupo Televisa SAB, you can compare the effects of market volatilities on Spotify Technology and Grupo Televisa 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 Spotify Technology with a short position of Grupo Televisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Grupo Televisa.

Diversification Opportunities for Spotify Technology and Grupo Televisa

0.42

Correlation Coefficient

Spotify Technology  Grupo Televisa

Very weak diversification

The 3 months correlation between Spotify and Grupo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of Spotify Technology i.e., Spotify Technology and Grupo Televisa go up and down completely randomly.

Pair Corralation between Spotify Technology and Grupo Televisa

Given the investment horizon of 90 days Spotify Technology SA is expected to generate 0.85 times more return on investment than Grupo Televisa. However, Spotify Technology SA is 1.17 times less risky than Grupo Televisa. It trades about 0.08 of its potential returns per unit of risk. Grupo Televisa SAB is currently generating about -0.03 per unit of risk. If you would invest  10,468  in Spotify Technology SA on January 26, 2024 and sell it today you would earn a total of  17,655  from holding Spotify Technology SA or generate 168.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

Spotify Technology SA  vs.  Grupo Televisa SAB

Spotify Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grupo Televisa SAB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Grupo Televisa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spotify Technology and Grupo Televisa

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

The idea behind Spotify Technology SA and Grupo Televisa 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.