Correlation Between Fomento Economico and Enersys
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Enersys 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 Enersys 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 Enersys, you can compare the effects of market volatilities on Fomento Economico and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Enersys.
Diversification Opportunities for Fomento Economico and Enersys
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fomento and Enersys is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Fomento Economico i.e., Fomento Economico and Enersys go up and down completely randomly.
Pair Corralation between Fomento Economico and Enersys
Considering the 90-day investment horizon Fomento Economico is expected to generate 1.15 times less return on investment than Enersys. But when comparing it to its historical volatility, Fomento Economico Mexicano is 1.22 times less risky than Enersys. It trades about 0.02 of its potential returns per unit of risk. Enersys is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8,112 in Enersys on January 10, 2025 and sell it today you would earn a total of 490.00 from holding Enersys or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Enersys
Performance |
| Timeline |
| Fomento Economico |
| Enersys |
Fomento Economico and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Enersys
The main advantage of trading using opposite Fomento Economico and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
| Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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