Correlation Between GRUPO CARSO and Federal Home

Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO and Federal Home 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 CARSO and Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRUPO CARSO A1 and Federal Home Loan, you can compare the effects of market volatilities on GRUPO CARSO and Federal Home 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 CARSO with a short position of Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO and Federal Home.

Diversification Opportunities for GRUPO CARSO and Federal Home

-0.05

Correlation Coefficient

GRUPO CARSO  Federal Home

Good diversification

The 3 months correlation between GRUPO and Federal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan and GRUPO CARSO 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 CARSO A1 are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of GRUPO CARSO i.e., GRUPO CARSO and Federal Home go up and down completely randomly.

Pair Corralation between GRUPO CARSO and Federal Home

Assuming the 90 days trading horizon GRUPO CARSO is expected to generate 10.09 times less return on investment than Federal Home. But when comparing it to its historical volatility, GRUPO CARSO A1 is 2.17 times less risky than Federal Home. It trades about 0.02 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  464.00  in Federal Home Loan on April 25, 2025 and sell it today you would earn a total of  91.00  from holding Federal Home Loan or generate 19.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GRUPO CARSO A1  vs.  Federal Home Loan

GRUPO CARSO A1

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GRUPO CARSO is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Federal Home Loan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Home Loan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Federal Home reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRUPO CARSO and Federal Home

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

The idea behind GRUPO CARSO A1 and Federal Home Loan 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.