Correlation Between IPC MEXICO and Compaa Minera

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

By analyzing existing cross correlation between IPC MEXICO and Compaa Minera Autln, you can compare the effects of market volatilities on IPC MEXICO and Compaa Minera 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 IPC MEXICO with a short position of Compaa Minera. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Compaa Minera.

Diversification Opportunities for IPC MEXICO and Compaa Minera

-0.41

Correlation Coefficient

IPC MEXICO  Compaa Minera

Very good diversification

The 3 months correlation between IPC and Compaa is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Compaa Minera Autln in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compaa Minera Autln and IPC MEXICO 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 IPC MEXICO are associated (or correlated) with Compaa Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compaa Minera Autln has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and Compaa Minera go up and down completely randomly.

Pair Corralation between IPC MEXICO and Compaa Minera

Assuming the 90 days trading horizon IPC MEXICO is expected to under-perform the Compaa Minera. But the index apears to be less risky and, when comparing its historical volatility, IPC MEXICO is 1.45 times less risky than Compaa Minera. The index trades about -0.02 of its potential returns per unit of risk. The Compaa Minera Autln is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  760.00  in Compaa Minera Autln on September 14, 2024 and sell it today you would earn a total of  13.00  from holding Compaa Minera Autln or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

IPC MEXICO  vs.  Compaa Minera Autln

Pair Trading with IPC MEXICO and Compaa Minera

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

The idea behind IPC MEXICO and Compaa Minera Autln 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.