Correlation Between Fomento Economico and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Nabors Energy 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 Nabors Energy 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 Nabors Energy Transition, you can compare the effects of market volatilities on Fomento Economico and Nabors Energy 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 Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Nabors Energy.
Diversification Opportunities for Fomento Economico and Nabors Energy
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fomento and Nabors is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition 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 Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of Fomento Economico i.e., Fomento Economico and Nabors Energy go up and down completely randomly.
Pair Corralation between Fomento Economico and Nabors Energy
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 6.7 times more return on investment than Nabors Energy. However, Fomento Economico is 6.7 times more volatile than Nabors Energy Transition. It trades about 0.02 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.08 per unit of risk. If you would invest 7,938 in Fomento Economico Mexicano on October 28, 2024 and sell it today you would earn a total of 595.00 from holding Fomento Economico Mexicano or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.18% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Nabors Energy Transition
Performance |
| Timeline |
| Fomento Economico |
| Nabors Energy Transition |
Fomento Economico and Nabors Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Nabors Energy
The main advantage of trading using opposite Fomento Economico and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Nabors Energy 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 Nabors Energy will offset losses from the drop in Nabors Energy'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 |
| Nabors Energy vs. Arrow Electronics | Nabors Energy vs. BioNTech SE | Nabors Energy vs. Inhibrx | Nabors Energy vs. BCE Inc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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