Correlation Between Fomento Econmico and Alsea SAB

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Fomento Econmico and Alsea SAB 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 Fomento Econmico and Alsea SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fomento Econmico Mexicano and Alsea SAB de, you can compare the effects of market volatilities on Fomento Econmico and Alsea SAB 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 Fomento Econmico with a short position of Alsea SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Econmico and Alsea SAB.

Diversification Opportunities for Fomento Econmico and Alsea SAB

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Fomento and Alsea is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Econmico Mexicano and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de and Fomento Econmico 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 Fomento Econmico Mexicano are associated (or correlated) with Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of Fomento Econmico i.e., Fomento Econmico and Alsea SAB go up and down completely randomly.

Pair Corralation between Fomento Econmico and Alsea SAB

Assuming the 90 days trading horizon Fomento Econmico Mexicano is expected to generate 0.81 times more return on investment than Alsea SAB. However, Fomento Econmico Mexicano is 1.24 times less risky than Alsea SAB. It trades about -0.07 of its potential returns per unit of risk. Alsea SAB de is currently generating about -0.07 per unit of risk. If you would invest  23,683  in Fomento Econmico Mexicano on November 5, 2024 and sell it today you would lose (6,068) from holding Fomento Econmico Mexicano or give up 25.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Fomento Econmico Mexicano  vs.  Alsea SAB de

 Performance 
       Timeline  
Fomento Econmico Mexicano 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fomento Econmico Mexicano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Alsea SAB de 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alsea SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Fomento Econmico and Alsea SAB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fomento Econmico and Alsea SAB

The main advantage of trading using opposite Fomento Econmico and Alsea SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Econmico position performs unexpectedly, Alsea SAB 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 Alsea SAB will offset losses from the drop in Alsea SAB's long position.
The idea behind Fomento Econmico Mexicano and Alsea SAB de 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

Other Complementary Tools

Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments