Correlation Between Xponential Fitness and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness 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 Xponential Fitness and Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and Fomento Economico Mexicano, you can compare the effects of market volatilities on Xponential Fitness 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 Xponential Fitness with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and Fomento Economico.
Diversification Opportunities for Xponential Fitness and Fomento Economico
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xponential and Fomento is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and Fomento Economico go up and down completely randomly.
Pair Corralation between Xponential Fitness and Fomento Economico
Given the investment horizon of 90 days Xponential Fitness is expected to generate 3.26 times more return on investment than Fomento Economico. However, Xponential Fitness is 3.26 times more volatile than Fomento Economico Mexicano. It trades about 0.01 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about 0.03 per unit of risk. If you would invest 2,286 in Xponential Fitness on September 13, 2024 and sell it today you would lose (848.00) from holding Xponential Fitness or give up 37.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xponential Fitness vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Xponential Fitness |
| Fomento Economico |
Xponential Fitness and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and Fomento Economico
The main advantage of trading using opposite Xponential Fitness and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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