Correlation Between FMC and Mundoro Capital

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

By analyzing existing cross correlation between FMC Corporation and Mundoro Capital, you can compare the effects of market volatilities on FMC and Mundoro Capital 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 Mundoro Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and Mundoro Capital.

Diversification Opportunities for FMC and Mundoro Capital

0.45

Correlation Coefficient

FMC  Mundoro Capital

Very weak diversification

The 3 months correlation between FMC and Mundoro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Mundoro Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundoro Capital 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 Mundoro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundoro Capital has no effect on the direction of FMC i.e., FMC and Mundoro Capital go up and down completely randomly.

Pair Corralation between FMC and Mundoro Capital

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the Mundoro Capital. In addition to that, FMC is 1.19 times more volatile than Mundoro Capital. It trades about -0.16 of its total potential returns per unit of risk. Mundoro Capital is currently generating about 0.01 per unit of volatility. If you would invest  18.00  in Mundoro Capital on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Mundoro Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

FMC Corp.  vs.  Mundoro Capital

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.

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mundoro Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with FMC and Mundoro Capital

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

The idea behind FMC Corporation and Mundoro Capital 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.