Correlation Between Grupo Televisa and Fomento Econmico

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

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

Diversification Opportunities for Grupo Televisa and Fomento Econmico

0.7

Correlation Coefficient

Grupo Televisa  Fomento Econmico

Poor diversification

The 3 months correlation between Grupo and Fomento is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB and Fomento Econmico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Econmico Mexicano and Grupo Televisa 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 Grupo Televisa SAB are associated (or correlated) with Fomento Econmico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Econmico Mexicano has no effect on the direction of Grupo Televisa i.e., Grupo Televisa and Fomento Econmico go up and down completely randomly.

Pair Corralation between Grupo Televisa and Fomento Econmico

Assuming the 90 days trading horizon Grupo Televisa is expected to generate 28.43 times less return on investment than Fomento Econmico. In addition to that, Grupo Televisa is 1.38 times more volatile than Fomento Econmico Mexicano. It trades about 0.0 of its total potential returns per unit of risk. Fomento Econmico Mexicano is currently generating about 0.09 per unit of volatility. If you would invest  17,774  in Fomento Econmico Mexicano on December 2, 2024 and sell it today you would earn a total of  1,525  from holding Fomento Econmico Mexicano or generate 8.58% return on investment over 90 days.

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

Grupo Televisa SAB  vs.  Fomento Econmico Mexicano

Grupo Televisa SAB

Risk-Adjusted Performance

Very Weak

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

Fomento Econmico Mexicano

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Econmico Mexicano are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Fomento Econmico may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grupo Televisa and Fomento Econmico

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

The idea behind Grupo Televisa SAB and Fomento Econmico Mexicano 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.