Correlation Between Fomento Economico and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Perseus Mining 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 Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on Fomento Economico and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Perseus Mining.
Diversification Opportunities for Fomento Economico and Perseus Mining
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fomento and Perseus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Fomento Economico i.e., Fomento Economico and Perseus Mining go up and down completely randomly.
Pair Corralation between Fomento Economico and Perseus Mining
Considering the 90-day investment horizon Fomento Economico is expected to generate 1.51 times less return on investment than Perseus Mining. But when comparing it to its historical volatility, Fomento Economico Mexicano is 1.94 times less risky than Perseus Mining. It trades about 0.03 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 154.00 in Perseus Mining Limited on August 31, 2024 and sell it today you would earn a total of 14.00 from holding Perseus Mining Limited or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.07% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Perseus Mining Limited
Performance |
| Timeline |
| Fomento Economico |
| Perseus Mining |
Fomento Economico and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Perseus Mining
The main advantage of trading using opposite Fomento Economico and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining'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 |
| Perseus Mining vs. Aurion Resources | Perseus Mining vs. Rio2 Limited | Perseus Mining vs. Palamina Corp | Perseus Mining vs. BTU Metals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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