Correlation Between Fomento Economico and Lion One
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Fomento Economico and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Lion One.
Diversification Opportunities for Fomento Economico and Lion One
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fomento and Lion is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Fomento Economico i.e., Fomento Economico and Lion One go up and down completely randomly.
Pair Corralation between Fomento Economico and Lion One
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.38 times more return on investment than Lion One. However, Fomento Economico Mexicano is 2.62 times less risky than Lion One. It trades about -0.07 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.08 per unit of risk. If you would invest 12,408 in Fomento Economico Mexicano on September 2, 2024 and sell it today you would lose (3,469) from holding Fomento Economico Mexicano or give up 27.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Lion One Metals
Performance |
| Timeline |
| Fomento Economico |
| Lion One Metals |
Fomento Economico and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Lion One
The main advantage of trading using opposite Fomento Economico and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One'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 |
| Lion One vs. Irving Resources | Lion One vs. Headwater Gold | Lion One vs. Novo Resources Corp | Lion One vs. Snowline Gold Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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