Correlation Between Fomento Econmico and Grupo Mxico

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Can any of the company-specific risk be diversified away by investing in both Fomento Econmico and Grupo Mxico 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 Grupo Mxico 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 Grupo Mxico SAB, you can compare the effects of market volatilities on Fomento Econmico and Grupo Mxico 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 Grupo Mxico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Econmico and Grupo Mxico.

Diversification Opportunities for Fomento Econmico and Grupo Mxico

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fomento and Grupo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Econmico Mexicano and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB 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 Grupo Mxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of Fomento Econmico i.e., Fomento Econmico and Grupo Mxico go up and down completely randomly.

Pair Corralation between Fomento Econmico and Grupo Mxico

Assuming the 90 days trading horizon Fomento Econmico Mexicano is expected to under-perform the Grupo Mxico. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Econmico Mexicano is 1.37 times less risky than Grupo Mxico. The stock trades about -0.39 of its potential returns per unit of risk. The Grupo Mxico SAB is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  10,879  in Grupo Mxico SAB on August 27, 2024 and sell it today you would lose (608.00) from holding Grupo Mxico SAB or give up 5.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fomento Econmico Mexicano  vs.  Grupo Mxico SAB

 Performance 
       Timeline  
Fomento Econmico Mexicano 

Risk-Adjusted Performance

0 of 100

 
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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 unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Grupo Mxico SAB 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Mxico SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Grupo Mxico is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Fomento Econmico and Grupo Mxico Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fomento Econmico and Grupo Mxico

The main advantage of trading using opposite Fomento Econmico and Grupo Mxico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Econmico position performs unexpectedly, Grupo Mxico 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 Mxico will offset losses from the drop in Grupo Mxico's long position.
Fomento Econmico vs. Grupo Financiero Banorte
Fomento Econmico vs. Alfa SAB de
Fomento Econmico vs. Grupo Mxico SAB
Fomento Econmico vs. CEMEX SAB de
The idea behind Fomento Econmico Mexicano and Grupo Mxico 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.
Grupo Mxico vs. CEMEX SAB de
Grupo Mxico vs. Grupo Financiero Banorte
Grupo Mxico vs. Alfa SAB de
Grupo Mxico vs. Fomento Econmico Mexicano
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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