Correlation Between Fomento Economico and EON Resources

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Can any of the company-specific risk be diversified away by investing in both Fomento Economico and EON Resources 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 Economico and EON Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fomento Economico Mexicano and EON Resources, you can compare the effects of market volatilities on Fomento Economico and EON Resources 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 Economico with a short position of EON Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and EON Resources.

Diversification Opportunities for Fomento Economico and EON Resources

FomentoEONDiversified AwayFomentoEONDiversified Away100%
0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fomento and EON is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources and Fomento Economico 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 Economico Mexicano are associated (or correlated) with EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of Fomento Economico i.e., Fomento Economico and EON Resources go up and down completely randomly.

Pair Corralation between Fomento Economico and EON Resources

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the EON Resources. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 5.53 times less risky than EON Resources. The stock trades about -0.17 of its potential returns per unit of risk. The EON Resources is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  136.00  in EON Resources on October 21, 2024 and sell it today you would lose (34.00) from holding EON Resources or give up 25.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fomento Economico Mexicano  vs.  EON Resources

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -60-50-40-30-20-100
JavaScript chart by amCharts 3.21.15FMX EONR
       Timeline  
Fomento Economico 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Fomento Economico Mexicano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan859095100
EON Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.60.811.21.4

Fomento Economico and EON Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.69-2.04-1.4-0.75-0.110.471.051.632.212.79 0.050.100.15
JavaScript chart by amCharts 3.21.15FMX EONR
       Returns  

Pair Trading with Fomento Economico and EON Resources

The main advantage of trading using opposite Fomento Economico and EON Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, EON Resources 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 EON Resources will offset losses from the drop in EON Resources' long position.
The idea behind Fomento Economico Mexicano and EON Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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