Correlation Between Blackbaud and Fomento Economico

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

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

Diversification Opportunities for Blackbaud and Fomento Economico

-0.29

Correlation Coefficient

Blackbaud  Fomento Economico

Very good diversification

The 3 months correlation between Blackbaud and Fomento is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Blackbaud 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 Blackbaud 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 Blackbaud i.e., Blackbaud and Fomento Economico go up and down completely randomly.

Pair Corralation between Blackbaud and Fomento Economico

Given the investment horizon of 90 days Blackbaud is expected to generate 1.33 times more return on investment than Fomento Economico. However, Blackbaud is 1.33 times more volatile than Fomento Economico Mexicano. It trades about 0.14 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.11 per unit of risk. If you would invest  6,109  in Blackbaud on May 1, 2025 and sell it today you would earn a total of  1,052  from holding Blackbaud or generate 17.22% return on investment over 90 days.

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

Blackbaud  vs.  Fomento Economico Mexicano

Blackbaud

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackbaud are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking signals, Blackbaud sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Blackbaud and Fomento Economico

The main advantage of trading using opposite Blackbaud and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackbaud 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 Blackbaud 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.