Correlation Between Integral and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Integral 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 Integral and Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integral Ad Science and Fomento Economico Mexicano, you can compare the effects of market volatilities on Integral 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 Integral with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and Fomento Economico.
Diversification Opportunities for Integral and Fomento Economico
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Integral and Fomento is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Integral 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 Integral Ad Science 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 Integral i.e., Integral and Fomento Economico go up and down completely randomly.
Pair Corralation between Integral and Fomento Economico
Considering the 90-day investment horizon Integral Ad Science is expected to under-perform the Fomento Economico. In addition to that, Integral is 2.13 times more volatile than Fomento Economico Mexicano. It trades about 0.0 of its total potential returns per unit of risk. Fomento Economico Mexicano is currently generating about 0.03 per unit of volatility. If you would invest 8,323 in Fomento Economico Mexicano on December 11, 2024 and sell it today you would earn a total of 1,339 from holding Fomento Economico Mexicano or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integral Ad Science vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Integral Ad Science |
| Fomento Economico |
Integral and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integral and Fomento Economico
The main advantage of trading using opposite Integral and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral 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.The idea behind Integral Ad Science and Fomento Economico Mexicano pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fomento Economico vs. Ambev SA ADR | ||
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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