Correlation Between Fomento Economico and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and Boston Beer 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 Boston Beer 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 Boston Beer, you can compare the effects of market volatilities on Fomento Economico and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and Boston Beer.
Diversification Opportunities for Fomento Economico and Boston Beer
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fomento and Boston is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Fomento Economico i.e., Fomento Economico and Boston Beer go up and down completely randomly.
Pair Corralation between Fomento Economico and Boston Beer
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.47 times more return on investment than Boston Beer. However, Fomento Economico Mexicano is 2.14 times less risky than Boston Beer. It trades about -0.04 of its potential returns per unit of risk. Boston Beer is currently generating about -0.21 per unit of risk. If you would invest 12,072 in Fomento Economico Mexicano on February 27, 2024 and sell it today you would lose (397.00) from holding Fomento Economico Mexicano or give up 3.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fomento Economico Mexicano vs. Boston Beer
Performance |
Timeline |
Fomento Economico |
Boston Beer |
Fomento Economico and Boston Beer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fomento Economico and Boston Beer
The main advantage of trading using opposite Fomento Economico and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Carlsberg AS | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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