Correlation Between Mxima Renda and Rec Fundo

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

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

Diversification Opportunities for Mxima Renda and Rec Fundo

-0.15

Correlation Coefficient

Mxima Renda  Rec Fundo

Good diversification

The 3 months correlation between Mxima and Rec is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mxima Renda Corporativa and Rec Fundo De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rec Fundo De and Mxima Renda 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 Mxima Renda Corporativa are associated (or correlated) with Rec Fundo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rec Fundo De has no effect on the direction of Mxima Renda i.e., Mxima Renda and Rec Fundo go up and down completely randomly.

Pair Corralation between Mxima Renda and Rec Fundo

Assuming the 90 days trading horizon Mxima Renda Corporativa is expected to under-perform the Rec Fundo. But the fund apears to be less risky and, when comparing its historical volatility, Mxima Renda Corporativa is 1.7 times less risky than Rec Fundo. The fund trades about -0.12 of its potential returns per unit of risk. The Rec Fundo De is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,300  in Rec Fundo De on September 12, 2024 and sell it today you would earn a total of  499.00  from holding Rec Fundo De or generate 7.92% return on investment over 90 days.

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

Mxima Renda Corporativa  vs.  Rec Fundo De

Mxima Renda Corporativa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mxima Renda Corporativa has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Rec Fundo De

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Mxima Renda and Rec Fundo

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

The idea behind Mxima Renda Corporativa and Rec Fundo De 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.