Correlation Between FMC and Jernimo Martins

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

By analyzing existing cross correlation between FMC Corporation and Jernimo Martins SGPS, you can compare the effects of market volatilities on FMC and Jernimo Martins 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 FMC with a short position of Jernimo Martins. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and Jernimo Martins.

Diversification Opportunities for FMC and Jernimo Martins

-0.64

Correlation Coefficient

FMC  Jernimo Martins

Excellent diversification

The 3 months correlation between FMC and Jernimo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Jernimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jernimo Martins SGPS and FMC 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 FMC Corporation are associated (or correlated) with Jernimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jernimo Martins SGPS has no effect on the direction of FMC i.e., FMC and Jernimo Martins go up and down completely randomly.

Pair Corralation between FMC and Jernimo Martins

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the Jernimo Martins. In addition to that, FMC is 1.45 times more volatile than Jernimo Martins SGPS. It trades about -0.03 of its total potential returns per unit of risk. Jernimo Martins SGPS is currently generating about -0.02 per unit of volatility. If you would invest  2,137  in Jernimo Martins SGPS on October 4, 2024 and sell it today you would lose (331.00) from holding Jernimo Martins SGPS or give up 15.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

FMC Corp.  vs.  Jernimo Martins SGPS

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Jernimo Martins SGPS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jernimo Martins SGPS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jernimo Martins may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FMC and Jernimo Martins

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

The idea behind FMC Corporation and Jernimo Martins SGPS 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.