Correlation Between Enerpac Tool and Industrias Bachoco

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Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and Industrias Bachoco 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 Enerpac Tool and Industrias Bachoco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enerpac Tool Group and Industrias Bachoco SAB, you can compare the effects of market volatilities on Enerpac Tool and Industrias Bachoco 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 Enerpac Tool with a short position of Industrias Bachoco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Industrias Bachoco.

Diversification Opportunities for Enerpac Tool and Industrias Bachoco

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Enerpac and Industrias is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Industrias Bachoco SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Bachoco SAB and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Industrias Bachoco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Bachoco SAB has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Industrias Bachoco go up and down completely randomly.

Pair Corralation between Enerpac Tool and Industrias Bachoco

Given the investment horizon of 90 days Enerpac Tool is expected to generate 1.57 times less return on investment than Industrias Bachoco. In addition to that, Enerpac Tool is 1.29 times more volatile than Industrias Bachoco SAB. It trades about 0.01 of its total potential returns per unit of risk. Industrias Bachoco SAB is currently generating about 0.03 per unit of volatility. If you would invest  4,298  in Industrias Bachoco SAB on September 3, 2022 and sell it today you would earn a total of  805.00  from holding Industrias Bachoco SAB or generate 18.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Enerpac Tool Group  vs.  Industrias Bachoco SAB

 Performance (%) 
       Timeline  
Enerpac Tool Group 
Enerpac Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Enerpac Tool sustained solid returns over the last few months and may actually be approaching a breakup point.

Enerpac Price Channel

Industrias Bachoco SAB 
Industrias Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Bachoco SAB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Industrias Bachoco may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Industrias Price Channel

Enerpac Tool and Industrias Bachoco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Enerpac Tool and Industrias Bachoco

The main advantage of trading using opposite Enerpac Tool and Industrias Bachoco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, Industrias Bachoco 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 Industrias Bachoco will offset losses from the drop in Industrias Bachoco's long position.
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Enerpac Tool vs. GROWTH FUND OF
Enerpac Tool vs. VANGUARD SMALL-CAP GROWTH
The idea behind Enerpac Tool Group and Industrias Bachoco 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.
Industrias Bachoco vs. GROWTH FUND OF
Industrias Bachoco vs. VANGUARD SMALL-CAP GROWTH
Industrias Bachoco vs. Alcoa Corp
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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