Correlation Between Fomento Economico and MBGGR

Can any of the company-specific risk be diversified away by investing in both Fomento Economico and MBGGR 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 MBGGR 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 MBGGR 35 03 AUG 25, you can compare the effects of market volatilities on Fomento Economico and MBGGR 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 MBGGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and MBGGR.

Diversification Opportunities for Fomento Economico and MBGGR

-0.74

Correlation Coefficient

Fomento Economico  MBGGR

Pay attention - limited upside

The 3 months correlation between Fomento and MBGGR is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and MBGGR 35 03 AUG 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBGGR 35 03 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 MBGGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBGGR 35 03 has no effect on the direction of Fomento Economico i.e., Fomento Economico and MBGGR go up and down completely randomly.

Pair Corralation between Fomento Economico and MBGGR

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the MBGGR. In addition to that, Fomento Economico is 1.51 times more volatile than MBGGR 35 03 AUG 25. It trades about -0.36 of its total potential returns per unit of risk. MBGGR 35 03 AUG 25 is currently generating about -0.45 per unit of volatility. If you would invest  9,924  in MBGGR 35 03 AUG 25 on October 6, 2024 and sell it today you would lose (246.00) from holding MBGGR 35 03 AUG 25 or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	25.0%
Values	Daily Returns

Fomento Economico Mexicano  vs.  MBGGR 35 03 AUG 25

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.

MBGGR 35 03

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBGGR 35 03 AUG 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MBGGR 35 03 AUG 25 investors.

Pair Trading with Fomento Economico and MBGGR

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

The idea behind Fomento Economico Mexicano and MBGGR 35 03 AUG 25 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.