Correlation Between Fomento Economico and Volcan
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By analyzing existing cross correlation between Fomento Economico Mexicano and Volcan Compania Minera, you can compare the effects of market volatilities on Fomento Economico and Volcan 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 Volcan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Volcan.
Diversification Opportunities for Fomento Economico and Volcan
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fomento and Volcan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Volcan Compania Minera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcan Compania Minera 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 Volcan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volcan Compania Minera has no effect on the direction of Fomento Economico i.e., Fomento Economico and Volcan go up and down completely randomly.
Pair Corralation between Fomento Economico and Volcan
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.2 times more return on investment than Volcan. However, Fomento Economico Mexicano is 5.07 times less risky than Volcan. It trades about -0.46 of its potential returns per unit of risk. Volcan Compania Minera is currently generating about -0.4 per unit of risk. If you would invest 9,680 in Fomento Economico Mexicano on August 30, 2024 and sell it today you would lose (1,099) from holding Fomento Economico Mexicano or give up 11.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 45.45% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. Volcan Compania Minera
Performance |
| Timeline |
| Fomento Economico |
| Volcan Compania Minera |
Fomento Economico and Volcan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and Volcan
The main advantage of trading using opposite Fomento Economico and Volcan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Volcan 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 Volcan will offset losses from the drop in Volcan'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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