Correlation Between Fomento Economico and Inception Growth

Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Inception Growth 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 Inception Growth 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 Inception Growth Acquisition, you can compare the effects of market volatilities on Fomento Economico and Inception Growth 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 Inception Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Inception Growth.

Diversification Opportunities for Fomento Economico and Inception Growth

-0.83

Correlation Coefficient

Fomento Economico  Inception Growth

Pay attention - limited upside

The 3 months correlation between Fomento and Inception is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Inception Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inception Growth Acq 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 Inception Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inception Growth Acq has no effect on the direction of Fomento Economico i.e., Fomento Economico and Inception Growth go up and down completely randomly.

Pair Corralation between Fomento Economico and Inception Growth

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Inception Growth. In addition to that, Fomento Economico is 2.57 times more volatile than Inception Growth Acquisition. It trades about -0.13 of its total potential returns per unit of risk. Inception Growth Acquisition is currently generating about 0.29 per unit of volatility. If you would invest  1,141  in Inception Growth Acquisition on October 25, 2024 and sell it today you would earn a total of  98.00  from holding Inception Growth Acquisition or generate 8.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	75.0%
Values	Daily Returns

Fomento Economico Mexicano  vs.  Inception Growth Acquisition

Fomento Economico

Risk-Adjusted Performance

0 of 100

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.

Inception Growth Acq

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Inception Growth Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Inception Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fomento Economico and Inception Growth

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

The idea behind Fomento Economico Mexicano and Inception Growth Acquisition 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.