Correlation Between Getty Realty and Compania Cervecerias

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

By analyzing existing cross correlation between Getty Realty and Compania Cervecerias Unidas, you can compare the effects of market volatilities on Getty Realty and Compania Cervecerias 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 Getty Realty with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getty Realty and Compania Cervecerias.

Diversification Opportunities for Getty Realty and Compania Cervecerias

0.22

Correlation Coefficient

Getty Realty  Compania Cervecerias

Modest diversification

The 3 months correlation between Getty and Compania is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Getty Realty 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 Getty Realty are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Getty Realty i.e., Getty Realty and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Getty Realty and Compania Cervecerias

Considering the 90-day investment horizon Getty Realty is expected to generate 8.06 times less return on investment than Compania Cervecerias. But when comparing it to its historical volatility, Getty Realty is 1.88 times less risky than Compania Cervecerias. It trades about 0.02 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,042  in Compania Cervecerias Unidas on September 19, 2024 and sell it today you would earn a total of  103.00  from holding Compania Cervecerias Unidas or generate 9.88% return on investment over 90 days.

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

Getty Realty  vs.  Compania Cervecerias Unidas

Getty Realty

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Getty Realty are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Compania Cervecerias

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Getty Realty and Compania Cervecerias

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

The idea behind Getty Realty and Compania Cervecerias Unidas 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.