Correlation Between NAVI CRDITO and Sp Downtown

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

By analyzing existing cross correlation between NAVI CRDITO IMOBILIRIO and Sp Downtown Fundo, you can compare the effects of market volatilities on NAVI CRDITO and Sp Downtown 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 NAVI CRDITO with a short position of Sp Downtown. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAVI CRDITO and Sp Downtown.

Diversification Opportunities for NAVI CRDITO and Sp Downtown

0.62

Correlation Coefficient

NAVI CRDITO  Sp Downtown

Poor diversification

The 3 months correlation between NAVI and SPTW11 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NAVI CRDITO IMOBILIRIO and Sp Downtown Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Downtown Fundo and NAVI CRDITO 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 NAVI CRDITO IMOBILIRIO are associated (or correlated) with Sp Downtown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Downtown Fundo has no effect on the direction of NAVI CRDITO i.e., NAVI CRDITO and Sp Downtown go up and down completely randomly.

Pair Corralation between NAVI CRDITO and Sp Downtown

Assuming the 90 days trading horizon NAVI CRDITO IMOBILIRIO is expected to generate 1.09 times more return on investment than Sp Downtown. However, NAVI CRDITO is 1.09 times more volatile than Sp Downtown Fundo. It trades about 0.0 of its potential returns per unit of risk. Sp Downtown Fundo is currently generating about -0.07 per unit of risk. If you would invest  846.00  in NAVI CRDITO IMOBILIRIO on September 29, 2024 and sell it today you would lose (20.00) from holding NAVI CRDITO IMOBILIRIO or give up 2.36% of portfolio value over 90 days.

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

NAVI CRDITO IMOBILIRIO  vs.  Sp Downtown Fundo

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAVI CRDITO IMOBILIRIO 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.

Sp Downtown Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sp Downtown Fundo 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.

Pair Trading with NAVI CRDITO and Sp Downtown

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

The idea behind NAVI CRDITO IMOBILIRIO and Sp Downtown Fundo 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.