Correlation Between Fomento Economico and Tesla
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on Fomento Economico and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Tesla.
Diversification Opportunities for Fomento Economico and Tesla
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fomento and Tesla is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Fomento Economico i.e., Fomento Economico and Tesla go up and down completely randomly.
Pair Corralation between Fomento Economico and Tesla
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 2.27 times less risky than Tesla. The stock trades about -0.01 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,915 in Tesla Inc on August 31, 2024 and sell it today you would earn a total of 16,374 from holding Tesla Inc or generate 96.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Tesla Inc
Performance |
| Timeline |
| Fomento Economico |
| Tesla Inc |
Fomento Economico and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Tesla
The main advantage of trading using opposite Fomento Economico and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla'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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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