Correlation Between Fomento Econmico and Public Storage

Can any of the company-specific risk be diversified away by investing in both Fomento Econmico and Public Storage 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 Econmico and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fomento Econmico Mexicano and Public Storage, you can compare the effects of market volatilities on Fomento Econmico and Public Storage 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 Econmico with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Econmico and Public Storage.

Diversification Opportunities for Fomento Econmico and Public Storage

-0.03

Correlation Coefficient

Fomento Econmico  Public Storage

Good diversification

The 3 months correlation between Fomento and Public is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Econmico Mexicano and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and Fomento Econmico 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 Econmico Mexicano are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Fomento Econmico i.e., Fomento Econmico and Public Storage go up and down completely randomly.

Pair Corralation between Fomento Econmico and Public Storage

Assuming the 90 days trading horizon Fomento Econmico Mexicano is expected to generate 0.97 times more return on investment than Public Storage. However, Fomento Econmico Mexicano is 1.03 times less risky than Public Storage. It trades about -0.15 of its potential returns per unit of risk. Public Storage is currently generating about -0.16 per unit of risk. If you would invest  8,950  in Fomento Econmico Mexicano on September 24, 2024 and sell it today you would lose (900.00) from holding Fomento Econmico Mexicano or give up 10.06% of portfolio value over 90 days.

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

Fomento Econmico Mexicano  vs.  Public Storage

Fomento Econmico Mexicano

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fomento Econmico Mexicano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Public Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fomento Econmico and Public Storage

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

The idea behind Fomento Econmico Mexicano and Public Storage 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.