Correlation Between Fomento Economico and 456837AH6

Can any of the company-specific risk be diversified away by investing in both Fomento Economico and 456837AH6 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 456837AH6 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 ING GROEP N, you can compare the effects of market volatilities on Fomento Economico and 456837AH6 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 456837AH6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and 456837AH6.

Diversification Opportunities for Fomento Economico and 456837AH6

0.71

Correlation Coefficient

Fomento Economico  456837AH6

Poor diversification

The 3 months correlation between Fomento and 456837AH6 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and ING GROEP N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING GROEP N 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 456837AH6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING GROEP N has no effect on the direction of Fomento Economico i.e., Fomento Economico and 456837AH6 go up and down completely randomly.

Pair Corralation between Fomento Economico and 456837AH6

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the 456837AH6. In addition to that, Fomento Economico is 3.66 times more volatile than ING GROEP N. It trades about -0.16 of its total potential returns per unit of risk. ING GROEP N is currently generating about -0.13 per unit of volatility. If you would invest  9,861  in ING GROEP N on October 4, 2024 and sell it today you would lose (199.00) from holding ING GROEP N or give up 2.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	66.67%
Values	Daily Returns

Fomento Economico Mexicano  vs.  ING GROEP N

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 uncertain 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.

ING GROEP N

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING GROEP N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 456837AH6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fomento Economico and 456837AH6

The main advantage of trading using opposite Fomento Economico and 456837AH6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, 456837AH6 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 456837AH6 will offset losses from the drop in 456837AH6's long position.

The idea behind Fomento Economico Mexicano and ING GROEP N 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.