Correlation Between Grupo Financiero and Grupo Bimbo

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

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

Diversification Opportunities for Grupo Financiero and Grupo Bimbo

0.46

Correlation Coefficient

Grupo Financiero  Grupo Bimbo

Very weak diversification

The 3 months correlation between Grupo and Grupo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and Grupo Financiero 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 Financiero Inbursa are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Grupo Bimbo go up and down completely randomly.

Pair Corralation between Grupo Financiero and Grupo Bimbo

Assuming the 90 days trading horizon Grupo Financiero Inbursa is expected to under-perform the Grupo Bimbo. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Financiero Inbursa is 1.2 times less risky than Grupo Bimbo. The stock trades about -0.12 of its potential returns per unit of risk. The Grupo Bimbo SAB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,172  in Grupo Bimbo SAB on February 1, 2024 and sell it today you would earn a total of  6.00  from holding Grupo Bimbo SAB or generate 0.08% return on investment over 90 days.

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

Grupo Financiero Inbursa  vs.  Grupo Bimbo SAB

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Grupo Financiero is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

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 unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Grupo Financiero and Grupo Bimbo

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

The idea behind Grupo Financiero Inbursa and Grupo Bimbo SAB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.