Correlation Between Gap, and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Gap, and Fomento Economico 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 Gap, and Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and Fomento Economico Mexicano, you can compare the effects of market volatilities on Gap, and Fomento Economico 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 Gap, with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Fomento Economico.
Diversification Opportunities for Gap, and Fomento Economico
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gap, and Fomento is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Gap, 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 The Gap, are associated (or correlated) with Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Gap, i.e., Gap, and Fomento Economico go up and down completely randomly.
Pair Corralation between Gap, and Fomento Economico
Considering the 90-day investment horizon The Gap, is expected to generate 2.19 times more return on investment than Fomento Economico. However, Gap, is 2.19 times more volatile than Fomento Economico Mexicano. It trades about 0.09 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.02 per unit of risk. If you would invest 919.00 in The Gap, on September 4, 2024 and sell it today you would earn a total of 1,662 from holding The Gap, or generate 180.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap, vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Gap, |
| Fomento Economico |
Gap, and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap, and Fomento Economico
The main advantage of trading using opposite Gap, and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's long position.| Gap, vs. Merit Medical Systems | Gap, vs. Postal Realty Trust | Gap, vs. Cumberland Pharmaceuticals | Gap, vs. RBC Bearings Incorporated |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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