Correlation Between Fomento Economico and Suburban Propane

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

Diversification Opportunities for Fomento Economico and Suburban Propane

0.52

Correlation Coefficient

Fomento Economico  Suburban Propane

Very weak diversification

The 3 months correlation between Fomento and Suburban is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of Fomento Economico i.e., Fomento Economico and Suburban Propane go up and down completely randomly.

Pair Corralation between Fomento Economico and Suburban Propane

Considering the 90-day investment horizon Fomento Economico is expected to generate 1.57 times less return on investment than Suburban Propane. But when comparing it to its historical volatility, Fomento Economico Mexicano is 1.03 times less risky than Suburban Propane. It trades about 0.14 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,702  in Suburban Propane Partners on December 21, 2024 and sell it today you would earn a total of  402.00  from holding Suburban Propane Partners or generate 23.62% return on investment over 90 days.

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

Fomento Economico Mexicano  vs.  Suburban Propane Partners

Fomento Economico

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Economico Mexicano are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Fomento Economico showed solid returns over the last few months and may actually be approaching a breakup point.

Suburban Propane Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fomento Economico and Suburban Propane

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

The idea behind Fomento Economico Mexicano and Suburban Propane Partners 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.