Correlation Between Fomento Economico and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Coca Cola 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 Coca Cola 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 Coca Cola Femsa SAB, you can compare the effects of market volatilities on Fomento Economico and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Coca Cola.
Diversification Opportunities for Fomento Economico and Coca Cola
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fomento and Coca is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Coca Cola Femsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Femsa 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Femsa has no effect on the direction of Fomento Economico i.e., Fomento Economico and Coca Cola go up and down completely randomly.
Pair Corralation between Fomento Economico and Coca Cola
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Coca Cola. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 1.03 times less risky than Coca Cola. The stock trades about -0.4 of its potential returns per unit of risk. The Coca Cola Femsa SAB is currently generating about -0.3 of returns per unit of risk over similar time horizon. If you would invest 8,586 in Coca Cola Femsa SAB on August 26, 2024 and sell it today you would lose (680.00) from holding Coca Cola Femsa SAB or give up 7.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Coca Cola Femsa SAB
Performance |
| Timeline |
| Fomento Economico |
| Coca Cola Femsa |
Fomento Economico and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Coca Cola
The main advantage of trading using opposite Fomento Economico and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. Fomento Economico Mexicano | Coca Cola vs. Grupo Televisa SAB | Coca Cola vs. Grupo Aeroportuario del | Coca Cola vs. Grupo Aeroportuario del |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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