Correlation Between Volcan and Fomento Economico
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By analyzing existing cross correlation between Volcan Compania Minera and Fomento Economico Mexicano, you can compare the effects of market volatilities on Volcan 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 Volcan with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volcan and Fomento Economico.
Diversification Opportunities for Volcan and Fomento Economico
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Volcan and Fomento is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Volcan Compania Minera and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Volcan 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 Volcan Compania Minera 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 Volcan i.e., Volcan and Fomento Economico go up and down completely randomly.
Pair Corralation between Volcan and Fomento Economico
Assuming the 90 days trading horizon Volcan Compania Minera is expected to under-perform the Fomento Economico. In addition to that, Volcan is 5.07 times more volatile than Fomento Economico Mexicano. It trades about -0.4 of its total potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.46 per unit of volatility. 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 |
Volcan Compania Minera vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Volcan Compania Minera |
| Fomento Economico |
Volcan and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volcan and Fomento Economico
The main advantage of trading using opposite Volcan and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volcan 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 Volcan Compania Minera 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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