Correlation Between Fomento Economico and National Vision
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and National Vision 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 National Vision 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 National Vision Holdings, you can compare the effects of market volatilities on Fomento Economico and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and National Vision.
Diversification Opportunities for Fomento Economico and National Vision
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fomento and National is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Fomento Economico i.e., Fomento Economico and National Vision go up and down completely randomly.
Pair Corralation between Fomento Economico and National Vision
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.46 times more return on investment than National Vision. However, Fomento Economico Mexicano is 2.19 times less risky than National Vision. It trades about 0.03 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.05 per unit of risk. If you would invest 7,497 in Fomento Economico Mexicano on September 3, 2024 and sell it today you would earn a total of 1,442 from holding Fomento Economico Mexicano or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. National Vision Holdings
Performance |
| Timeline |
| Fomento Economico |
| National Vision Holdings |
Fomento Economico and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and National Vision
The main advantage of trading using opposite Fomento Economico and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision'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 |
| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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