Correlation Between Fomento Economico and OFX Group
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and OFX Group 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 OFX Group 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 OFX Group Ltd, you can compare the effects of market volatilities on Fomento Economico and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and OFX Group.
Diversification Opportunities for Fomento Economico and OFX Group
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fomento and OFX is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Fomento Economico i.e., Fomento Economico and OFX Group go up and down completely randomly.
Pair Corralation between Fomento Economico and OFX Group
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the OFX Group. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 4.05 times less risky than OFX Group. The stock trades about -0.11 of its potential returns per unit of risk. The OFX Group Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 440.00 in OFX Group Ltd on September 3, 2024 and sell it today you would lose (5.00) from holding OFX Group Ltd or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. OFX Group Ltd
Performance |
| Timeline |
| Fomento Economico |
| OFX Group |
Fomento Economico and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and OFX Group
The main advantage of trading using opposite Fomento Economico and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group'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 |
| OFX Group vs. NETGEAR | OFX Group vs. Sphere Entertainment Co | OFX Group vs. Meiwu Technology Co | OFX Group vs. Western Digital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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