Correlation Between Fomento Economico and Farmmi
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Farmmi 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 Farmmi 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 Farmmi Inc, you can compare the effects of market volatilities on Fomento Economico and Farmmi 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 Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Farmmi.
Diversification Opportunities for Fomento Economico and Farmmi
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fomento and Farmmi is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc 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 Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Fomento Economico i.e., Fomento Economico and Farmmi go up and down completely randomly.
Pair Corralation between Fomento Economico and Farmmi
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.2 times more return on investment than Farmmi. However, Fomento Economico Mexicano is 4.91 times less risky than Farmmi. It trades about -0.12 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.05 per unit of risk. If you would invest 11,252 in Fomento Economico Mexicano on August 29, 2024 and sell it today you would lose (2,671) from holding Fomento Economico Mexicano or give up 23.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Farmmi Inc
Performance |
| Timeline |
| Fomento Economico |
| Farmmi Inc |
Fomento Economico and Farmmi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Farmmi
The main advantage of trading using opposite Fomento Economico and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi'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 |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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