Correlation Between Fomento Economico and Global E
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Global E 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 Global E 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 Global E Online, you can compare the effects of market volatilities on Fomento Economico and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Global E.
Diversification Opportunities for Fomento Economico and Global E
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fomento and Global is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Fomento Economico i.e., Fomento Economico and Global E go up and down completely randomly.
Pair Corralation between Fomento Economico and Global E
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Global E. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 1.96 times less risky than Global E. The stock trades about -0.02 of its potential returns per unit of risk. The Global E Online is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,713 in Global E Online on September 1, 2024 and sell it today you would earn a total of 1,515 from holding Global E Online or generate 40.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Global E Online
Performance |
| Timeline |
| Fomento Economico |
| Global E Online |
Fomento Economico and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Global E
The main advantage of trading using opposite Fomento Economico and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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