Correlation Between Fomento Economico and Invesco Dynamic

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

Diversification Opportunities for Fomento Economico and Invesco Dynamic

-0.88

Correlation Coefficient

Fomento Economico  Invesco Dynamic

Pay attention - limited upside

The 3 months correlation between Fomento and Invesco is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Invesco Dynamic Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Dynamic Leisure 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 Invesco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Dynamic Leisure has no effect on the direction of Fomento Economico i.e., Fomento Economico and Invesco Dynamic go up and down completely randomly.

Pair Corralation between Fomento Economico and Invesco Dynamic

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Invesco Dynamic. In addition to that, Fomento Economico is 1.79 times more volatile than Invesco Dynamic Leisure. It trades about -0.19 of its total potential returns per unit of risk. Invesco Dynamic Leisure is currently generating about 0.11 per unit of volatility. If you would invest  5,306  in Invesco Dynamic Leisure on September 12, 2024 and sell it today you would earn a total of  124.00  from holding Invesco Dynamic Leisure or generate 2.34% return on investment over 90 days.

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

Fomento Economico Mexicano  vs.  Invesco Dynamic Leisure

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Invesco Dynamic Leisure

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dynamic Leisure are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Invesco Dynamic revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fomento Economico and Invesco Dynamic

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

The idea behind Fomento Economico Mexicano and Invesco Dynamic Leisure 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 Anywhere module to track or share privately all of your investments from the convenience of any device.