Correlation Between AltShares Trust and Fomento Economico

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

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

Diversification Opportunities for AltShares Trust and Fomento Economico

-0.52

Correlation Coefficient

AltShares Trust  Fomento Economico

Excellent diversification

The 3 months correlation between AltShares and Fomento is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding AltShares Trust and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and AltShares Trust 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 AltShares Trust are associated (or correlated) with Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of AltShares Trust i.e., AltShares Trust and Fomento Economico go up and down completely randomly.

Pair Corralation between AltShares Trust and Fomento Economico

Considering the 90-day investment horizon AltShares Trust is expected to generate 0.11 times more return on investment than Fomento Economico. However, AltShares Trust is 9.5 times less risky than Fomento Economico. It trades about 0.23 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.1 per unit of risk. If you would invest  2,812  in AltShares Trust on May 5, 2025 and sell it today you would earn a total of  65.00  from holding AltShares Trust or generate 2.31% return on investment over 90 days.

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

AltShares Trust   vs.  Fomento Economico Mexicano

AltShares Trust

Risk-Adjusted Performance

Solid

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

Fomento Economico

Risk-Adjusted Performance

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 latest abnormal performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AltShares Trust and Fomento Economico

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

The idea behind AltShares Trust and Fomento Economico 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.