Correlation Between Fomento Economico and Dole PLC
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Dole PLC 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 Dole PLC 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 Dole PLC, you can compare the effects of market volatilities on Fomento Economico and Dole PLC 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 Dole PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Dole PLC.
Diversification Opportunities for Fomento Economico and Dole PLC
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fomento and Dole is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC 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 Dole PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dole PLC has no effect on the direction of Fomento Economico i.e., Fomento Economico and Dole PLC go up and down completely randomly.
Pair Corralation between Fomento Economico and Dole PLC
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 1.14 times more return on investment than Dole PLC. However, Fomento Economico is 1.14 times more volatile than Dole PLC. It trades about -0.07 of its potential returns per unit of risk. Dole PLC is currently generating about -0.13 per unit of risk. If you would invest 8,471 in Fomento Economico Mexicano on October 20, 2024 and sell it today you would lose (221.00) from holding Fomento Economico Mexicano or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Dole PLC
Performance |
| Timeline |
| Fomento Economico |
| Dole PLC |
Fomento Economico and Dole PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Dole PLC
The main advantage of trading using opposite Fomento Economico and Dole PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Dole PLC 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 Dole PLC will offset losses from the drop in Dole PLC'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 |
| Dole PLC vs. Limoneira Co | Dole PLC vs. Alico Inc | Dole PLC vs. Adecoagro SA | Dole PLC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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