Correlation Between Companhia Habitasul and Itau Fundo

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

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

Diversification Opportunities for Companhia Habitasul and Itau Fundo

0.55

Correlation Coefficient

Companhia Habitasul  Itau Fundo

Very weak diversification

The 3 months correlation between Companhia and Itau is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Habitasul de and Itau Fundo De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau Fundo De and Companhia Habitasul 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 Companhia Habitasul de are associated (or correlated) with Itau Fundo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau Fundo De has no effect on the direction of Companhia Habitasul i.e., Companhia Habitasul and Itau Fundo go up and down completely randomly.

Pair Corralation between Companhia Habitasul and Itau Fundo

Assuming the 90 days trading horizon Companhia Habitasul de is expected to under-perform the Itau Fundo. In addition to that, Companhia Habitasul is 4.09 times more volatile than Itau Fundo De. It trades about -0.14 of its total potential returns per unit of risk. Itau Fundo De is currently generating about -0.21 per unit of volatility. If you would invest  9,886  in Itau Fundo De on September 7, 2024 and sell it today you would lose (1,086) from holding Itau Fundo De or give up 10.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Companhia Habitasul de  vs.  Itau Fundo De

Companhia Habitasul

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Habitasul de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Itau Fundo De

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itau Fundo De has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Companhia Habitasul and Itau Fundo

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

The idea behind Companhia Habitasul de and Itau 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.