Correlation Between Grupo Gigante and Best Buy

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

By analyzing existing cross correlation between Grupo Gigante S and Best Buy Co, you can compare the effects of market volatilities on Grupo Gigante and Best Buy 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 Gigante with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Gigante and Best Buy.

Diversification Opportunities for Grupo Gigante and Best Buy

0.73

Correlation Coefficient

Grupo Gigante  Best Buy

Poor diversification

The 3 months correlation between Grupo and Best is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Gigante S and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Grupo Gigante 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 Gigante S are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Grupo Gigante i.e., Grupo Gigante and Best Buy go up and down completely randomly.

Pair Corralation between Grupo Gigante and Best Buy

Assuming the 90 days trading horizon Grupo Gigante S is expected to generate 0.76 times more return on investment than Best Buy. However, Grupo Gigante S is 1.31 times less risky than Best Buy. It trades about 0.03 of its potential returns per unit of risk. Best Buy Co is currently generating about -0.02 per unit of risk. If you would invest  2,800  in Grupo Gigante S on January 31, 2024 and sell it today you would earn a total of  400.00  from holding Grupo Gigante S or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Grupo Gigante S  vs.  Best Buy Co

Grupo Gigante S

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Gigante S are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Gigante is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Best Buy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Best Buy may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Grupo Gigante and Best Buy

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

The idea behind Grupo Gigante S and Best Buy Co 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.