Correlation Between Chiba Bank and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and Fomento Economico 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 Chiba Bank and Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank Ltd and Fomento Economico Mexicano, you can compare the effects of market volatilities on Chiba Bank and Fomento Economico 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 Chiba Bank with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and Fomento Economico.
Diversification Opportunities for Chiba Bank and Fomento Economico
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chiba and Fomento is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank Ltd and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Chiba Bank 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 Chiba Bank Ltd are associated (or correlated) with Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Chiba Bank i.e., Chiba Bank and Fomento Economico go up and down completely randomly.
Pair Corralation between Chiba Bank and Fomento Economico
Assuming the 90 days horizon Chiba Bank Ltd is expected to generate 1.97 times more return on investment than Fomento Economico. However, Chiba Bank is 1.97 times more volatile than Fomento Economico Mexicano. It trades about 0.02 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about 0.02 per unit of risk. If you would invest 3,738 in Chiba Bank Ltd on August 27, 2024 and sell it today you would earn a total of 30.00 from holding Chiba Bank Ltd or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank Ltd vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Chiba Bank |
| Fomento Economico |
Chiba Bank and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and Fomento Economico
The main advantage of trading using opposite Chiba Bank and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's long position.| Chiba Bank vs. First Hawaiian | Chiba Bank vs. Central Pacific Financial | Chiba Bank vs. Territorial Bancorp | Chiba Bank vs. Comerica |
| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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