Correlation Between Fomento Economico and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Lotus Technology 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 Lotus Technology 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 Lotus Technology Warrants, you can compare the effects of market volatilities on Fomento Economico and Lotus Technology 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 Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Lotus Technology.
Diversification Opportunities for Fomento Economico and Lotus Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fomento and Lotus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants 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 Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of Fomento Economico i.e., Fomento Economico and Lotus Technology go up and down completely randomly.
Pair Corralation between Fomento Economico and Lotus Technology
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.16 times more return on investment than Lotus Technology. However, Fomento Economico Mexicano is 6.16 times less risky than Lotus Technology. It trades about -0.19 of its potential returns per unit of risk. Lotus Technology Warrants is currently generating about -0.1 per unit of risk. If you would invest 9,620 in Fomento Economico Mexicano on September 12, 2024 and sell it today you would lose (688.00) from holding Fomento Economico Mexicano or give up 7.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.43% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Lotus Technology Warrants
Performance |
| Timeline |
| Fomento Economico |
| Lotus Technology Warrants |
Fomento Economico and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Lotus Technology
The main advantage of trading using opposite Fomento Economico and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology'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 |
| Lotus Technology vs. EvoAir Holdings | Lotus Technology vs. Finnair Oyj | Lotus Technology vs. Lindblad Expeditions Holdings | Lotus Technology vs. Mesa Air Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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