Correlation Between United States and Grupo Aval

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

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

Diversification Opportunities for United States and Grupo Aval

0.33

Correlation Coefficient

United States  Grupo Aval

Weak diversification

The 3 months correlation between United and Grupo is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding United States Lime and Grupo Aval in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval and United States 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 United States Lime are associated (or correlated) with Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval has no effect on the direction of United States i.e., United States and Grupo Aval go up and down completely randomly.

Pair Corralation between United States and Grupo Aval

Given the investment horizon of 90 days United States Lime is expected to generate 1.2 times more return on investment than Grupo Aval. However, United States is 1.2 times more volatile than Grupo Aval. It trades about 0.08 of its potential returns per unit of risk. Grupo Aval is currently generating about 0.04 per unit of risk. If you would invest  9,717  in United States Lime on May 7, 2025 and sell it today you would earn a total of  953.00  from holding United States Lime or generate 9.81% return on investment over 90 days.

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

United States Lime  vs.  Grupo Aval

United States Lime

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in United States Lime are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, United States may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Grupo Aval

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Grupo Aval is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United States and Grupo Aval

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

The idea behind United States Lime and Grupo Aval 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.