Correlation Between Nasdaq and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Fomento Economico Mexicano, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Fomento Economico.
Diversification Opportunities for Nasdaq and Fomento Economico
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq and Fomento is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Fomento Economico go up and down completely randomly.
Pair Corralation between Nasdaq and Fomento Economico
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.9 times more return on investment than Fomento Economico. However, Nasdaq Inc is 1.11 times less risky than Fomento Economico. It trades about 0.36 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.42 per unit of risk. If you would invest 7,534 in Nasdaq Inc on August 28, 2024 and sell it today you would earn a total of 618.00 from holding Nasdaq Inc or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Nasdaq Inc |
| Fomento Economico |
Nasdaq and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Fomento Economico
The main advantage of trading using opposite Nasdaq and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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 | 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |