Correlation Between Fomento Economico and Cunningham Natural
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Cunningham Natural 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 Cunningham Natural 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 Cunningham Natural Resources, you can compare the effects of market volatilities on Fomento Economico and Cunningham Natural 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 Cunningham Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Cunningham Natural.
Diversification Opportunities for Fomento Economico and Cunningham Natural
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fomento and Cunningham is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Cunningham Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cunningham Natural 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 Cunningham Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cunningham Natural has no effect on the direction of Fomento Economico i.e., Fomento Economico and Cunningham Natural go up and down completely randomly.
Pair Corralation between Fomento Economico and Cunningham Natural
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Cunningham Natural. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 9.69 times less risky than Cunningham Natural. The stock trades about -0.19 of its potential returns per unit of risk. The Cunningham Natural Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2.04 in Cunningham Natural Resources on September 12, 2024 and sell it today you would lose (0.34) from holding Cunningham Natural Resources or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Cunningham Natural Resources
Performance |
| Timeline |
| Fomento Economico |
| Cunningham Natural |
Fomento Economico and Cunningham Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Cunningham Natural
The main advantage of trading using opposite Fomento Economico and Cunningham Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Cunningham Natural 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 Cunningham Natural will offset losses from the drop in Cunningham Natural'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 |
| Cunningham Natural vs. Delek Logistics Partners | Cunningham Natural vs. TFI International | Cunningham Natural vs. Tower Semiconductor | Cunningham Natural vs. Amkor Technology |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |