Correlation Between Fomento Economico and Stevanato Group
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Stevanato 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 Stevanato 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 Stevanato Group SpA, you can compare the effects of market volatilities on Fomento Economico and Stevanato 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 Stevanato Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Stevanato Group.
Diversification Opportunities for Fomento Economico and Stevanato Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fomento and Stevanato is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Stevanato Group SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stevanato Group SpA 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 Stevanato Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stevanato Group SpA has no effect on the direction of Fomento Economico i.e., Fomento Economico and Stevanato Group go up and down completely randomly.
Pair Corralation between Fomento Economico and Stevanato Group
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Stevanato Group. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 2.06 times less risky than Stevanato Group. The stock trades about -0.05 of its potential returns per unit of risk. The Stevanato Group SpA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,696 in Stevanato Group SpA on September 1, 2024 and sell it today you would lose (693.00) from holding Stevanato Group SpA or give up 25.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Stevanato Group SpA
Performance |
| Timeline |
| Fomento Economico |
| Stevanato Group SpA |
Fomento Economico and Stevanato Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Stevanato Group
The main advantage of trading using opposite Fomento Economico and Stevanato Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Stevanato 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 Stevanato Group will offset losses from the drop in Stevanato 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 |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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