Correlation Between Grupo Bimbo and Sparta Capital

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

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

Diversification Opportunities for Grupo Bimbo and Sparta Capital

0.67

Correlation Coefficient

Grupo Bimbo  Sparta Capital

Poor diversification

The 3 months correlation between Grupo and Sparta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Grupo Bimbo 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 Bimbo SAB are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Sparta Capital go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Sparta Capital

Assuming the 90 days horizon Grupo Bimbo SAB is expected to under-perform the Sparta Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Grupo Bimbo SAB is 2.18 times less risky than Sparta Capital. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Sparta Capital is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3.30  in Sparta Capital on September 12, 2024 and sell it today you would lose (1.80) from holding Sparta Capital or give up 54.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.99%
Values	Daily Returns

Grupo Bimbo SAB  vs.  Sparta Capital

Grupo Bimbo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grupo Bimbo and Sparta Capital

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

The idea behind Grupo Bimbo SAB and Sparta Capital 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.