Correlation Between Fomento Econmico and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both Fomento Econmico and Martin Marietta 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 Fomento Econmico and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fomento Econmico Mexicano and Martin Marietta Materials, you can compare the effects of market volatilities on Fomento Econmico and Martin Marietta 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 Fomento Econmico with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Econmico and Martin Marietta.

Diversification Opportunities for Fomento Econmico and Martin Marietta

-0.8

Correlation Coefficient

Fomento Econmico  Martin Marietta

Pay attention - limited upside

The 3 months correlation between Fomento and Martin is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Econmico Mexicano and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Fomento Econmico 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 Fomento Econmico Mexicano are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Fomento Econmico i.e., Fomento Econmico and Martin Marietta go up and down completely randomly.

Pair Corralation between Fomento Econmico and Martin Marietta

Assuming the 90 days trading horizon Fomento Econmico Mexicano is expected to generate 0.82 times more return on investment than Martin Marietta. However, Fomento Econmico Mexicano is 1.22 times less risky than Martin Marietta. It trades about 0.18 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.1 per unit of risk. If you would invest  17,442  in Fomento Econmico Mexicano on December 29, 2024 and sell it today you would earn a total of  3,049  from holding Fomento Econmico Mexicano or generate 17.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fomento Econmico Mexicano  vs.  Martin Marietta Materials

Fomento Econmico Mexicano

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Econmico Mexicano are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Fomento Econmico sustained solid returns over the last few months and may actually be approaching a breakup point.

Martin Marietta Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fomento Econmico and Martin Marietta

The main advantage of trading using opposite Fomento Econmico and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Econmico position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.

The idea behind Fomento Econmico Mexicano and Martin Marietta Materials 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..