Correlation Between Fomento Economico and Adecoagro
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Adecoagro 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 Economico and Adecoagro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fomento Economico Mexicano and Adecoagro SA, you can compare the effects of market volatilities on Fomento Economico and Adecoagro 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 Economico with a short position of Adecoagro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Adecoagro.
Diversification Opportunities for Fomento Economico and Adecoagro
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fomento and Adecoagro is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA and Fomento Economico 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 Economico Mexicano are associated (or correlated) with Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of Fomento Economico i.e., Fomento Economico and Adecoagro go up and down completely randomly.
Pair Corralation between Fomento Economico and Adecoagro
Considering the 90-day investment horizon Fomento Economico is expected to generate 29.63 times less return on investment than Adecoagro. In addition to that, Fomento Economico is 1.69 times more volatile than Adecoagro SA. It trades about 0.0 of its total potential returns per unit of risk. Adecoagro SA is currently generating about 0.08 per unit of volatility. If you would invest 957.00 in Adecoagro SA on November 3, 2024 and sell it today you would earn a total of 16.00 from holding Adecoagro SA or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Adecoagro SA
Performance |
| Timeline |
| Fomento Economico |
| Adecoagro SA |
Fomento Economico and Adecoagro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Adecoagro
The main advantage of trading using opposite Fomento Economico and Adecoagro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Adecoagro 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 Adecoagro will offset losses from the drop in Adecoagro's long position.| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
| Adecoagro vs. Limoneira Co | Adecoagro vs. Dole PLC | Adecoagro vs. Alico Inc | Adecoagro vs. Cal Maine Foods |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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