Correlation Between Eq Energy and Fomento Económico
Can any of the company-specific risk be diversified away by investing in both Eq Energy and Fomento Económico 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 Eq Energy and Fomento Económico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eq Energy Drink and Fomento Econmico Mexicano, you can compare the effects of market volatilities on Eq Energy and Fomento Económico 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 Eq Energy with a short position of Fomento Económico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eq Energy and Fomento Económico.
Diversification Opportunities for Eq Energy and Fomento Económico
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EQLB and Fomento is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Eq Energy Drink and Fomento Econmico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Econmico Mexicano and Eq Energy 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 Eq Energy Drink are associated (or correlated) with Fomento Económico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Econmico Mexicano has no effect on the direction of Eq Energy i.e., Eq Energy and Fomento Económico go up and down completely randomly.
Pair Corralation between Eq Energy and Fomento Económico
Given the investment horizon of 90 days Eq Energy Drink is expected to generate 5.99 times more return on investment than Fomento Económico. However, Eq Energy is 5.99 times more volatile than Fomento Econmico Mexicano. It trades about 0.1 of its potential returns per unit of risk. Fomento Econmico Mexicano is currently generating about 0.03 per unit of risk. If you would invest 0.16 in Eq Energy Drink on August 31, 2024 and sell it today you would lose (0.08) from holding Eq Energy Drink or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.62% |
| Values | Daily Returns |
Eq Energy Drink vs. Fomento Econmico Mexicano
Performance |
| Timeline |
| Eq Energy Drink |
| Fomento Econmico Mexicano |
Eq Energy and Fomento Económico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eq Energy and Fomento Económico
The main advantage of trading using opposite Eq Energy and Fomento Económico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eq Energy position performs unexpectedly, Fomento Económico 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 Económico will offset losses from the drop in Fomento Económico's long position.| Eq Energy vs. PepsiCo | Eq Energy vs. Coca Cola Consolidated | Eq Energy vs. Monster Beverage Corp | Eq Energy vs. Celsius Holdings |
| Fomento Económico vs. Barfresh Food Group | Fomento Económico vs. Fbec Worldwide | Fomento Económico vs. Flow Beverage Corp | Fomento Económico vs. Eq Energy Drink |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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