Correlation Between Controladora Vuela and SPDR Index

Can any of the company-specific risk be diversified away by investing in both Controladora Vuela and SPDR Index 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 Controladora Vuela and SPDR Index into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Controladora Vuela Compaa and SPDR Index Shares, you can compare the effects of market volatilities on Controladora Vuela and SPDR Index 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 Controladora Vuela with a short position of SPDR Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Controladora Vuela and SPDR Index.

Diversification Opportunities for Controladora Vuela and SPDR Index

-0.44

Correlation Coefficient

Controladora Vuela  SPDR Index

Very good diversification

The 3 months correlation between Controladora and SPDR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Controladora Vuela Compaa and SPDR Index Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Index Shares and Controladora Vuela 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 Controladora Vuela Compaa are associated (or correlated) with SPDR Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Index Shares has no effect on the direction of Controladora Vuela i.e., Controladora Vuela and SPDR Index go up and down completely randomly.

Pair Corralation between Controladora Vuela and SPDR Index

Assuming the 90 days trading horizon Controladora Vuela Compaa is expected to generate 1.36 times more return on investment than SPDR Index. However, Controladora Vuela is 1.36 times more volatile than SPDR Index Shares. It trades about 0.27 of its potential returns per unit of risk. SPDR Index Shares is currently generating about -0.06 per unit of risk. If you would invest  1,170  in Controladora Vuela Compaa on September 5, 2024 and sell it today you would earn a total of  476.00  from holding Controladora Vuela Compaa or generate 40.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Controladora Vuela Compaa  vs.  SPDR Index Shares

Controladora Vuela Compaa

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Controladora Vuela Compaa are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Controladora Vuela sustained solid returns over the last few months and may actually be approaching a breakup point.

SPDR Index Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Index Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SPDR Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Controladora Vuela and SPDR Index

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

The idea behind Controladora Vuela Compaa and SPDR Index Shares 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.