Correlation Between FDO INV and Fundo De

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

By analyzing existing cross correlation between FDO INV IMOB and Fundo De Investimentos, you can compare the effects of market volatilities on FDO INV and Fundo De 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 FDO INV with a short position of Fundo De. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDO INV and Fundo De.

Diversification Opportunities for FDO INV and Fundo De

0.18

Correlation Coefficient

FDO INV  Fundo De

Average diversification

The 3 months correlation between FDO and Fundo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV IMOB and Fundo De Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo De Investimentos and FDO INV 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 FDO INV IMOB are associated (or correlated) with Fundo De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo De Investimentos has no effect on the direction of FDO INV i.e., FDO INV and Fundo De go up and down completely randomly.

Pair Corralation between FDO INV and Fundo De

Assuming the 90 days trading horizon FDO INV IMOB is expected to generate 0.43 times more return on investment than Fundo De. However, FDO INV IMOB is 2.34 times less risky than Fundo De. It trades about 0.15 of its potential returns per unit of risk. Fundo De Investimentos is currently generating about 0.04 per unit of risk. If you would invest  128,874  in FDO INV IMOB on September 19, 2024 and sell it today you would earn a total of  15,376  from holding FDO INV IMOB or generate 11.93% return on investment over 90 days.

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

FDO INV IMOB  vs.  Fundo De Investimentos

FDO INV IMOB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, FDO INV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fundo De Investimentos

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fundo De Investimentos are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Fundo De may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FDO INV and Fundo De

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

The idea behind FDO INV IMOB and Fundo De Investimentos 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.