Correlation Between Fomento Economico and Rumble
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Rumble 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 Rumble 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 Rumble Inc, you can compare the effects of market volatilities on Fomento Economico and Rumble 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 Rumble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Rumble.
Diversification Opportunities for Fomento Economico and Rumble
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fomento and Rumble is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble Inc 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 Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of Fomento Economico i.e., Fomento Economico and Rumble go up and down completely randomly.
Pair Corralation between Fomento Economico and Rumble
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Rumble. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 5.6 times less risky than Rumble. The stock trades about -0.4 of its potential returns per unit of risk. The Rumble Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 568.00 in Rumble Inc on August 26, 2024 and sell it today you would earn a total of 74.00 from holding Rumble Inc or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Rumble Inc
Performance |
| Timeline |
| Fomento Economico |
| Rumble Inc |
Fomento Economico and Rumble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Rumble
The main advantage of trading using opposite Fomento Economico and Rumble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Rumble 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 Rumble will offset losses from the drop in Rumble'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 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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