Correlation Between S1YM34 and Fundo De

Can any of the company-specific risk be diversified away by investing in both S1YM34 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 S1YM34 and Fundo De into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S1YM34 and Fundo De Investimentos, you can compare the effects of market volatilities on S1YM34 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 S1YM34 with a short position of Fundo De. Check out your portfolio center. Please also check ongoing floating volatility patterns of S1YM34 and Fundo De.

Diversification Opportunities for S1YM34 and Fundo De

0.47

Correlation Coefficient

S1YM34  Fundo De

Very weak diversification

The 3 months correlation between S1YM34 and Fundo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding S1YM34 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 S1YM34 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 S1YM34 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 S1YM34 i.e., S1YM34 and Fundo De go up and down completely randomly.

Pair Corralation between S1YM34 and Fundo De

Assuming the 90 days trading horizon S1YM34 is expected to generate 1.2 times more return on investment than Fundo De. However, S1YM34 is 1.2 times more volatile than Fundo De Investimentos. It trades about 0.14 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  13,472  in S1YM34 on September 23, 2024 and sell it today you would earn a total of  4,421  from holding S1YM34 or generate 32.82% return on investment over 90 days.

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

S1YM34  vs.  Fundo De Investimentos

S1YM34

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in S1YM34 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, S1YM34 sustained solid returns over the last few months and may actually be approaching a breakup point.

Fundo De Investimentos

Risk-Adjusted Performance

3 of 100

Insignificant

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 S1YM34 and Fundo De

The main advantage of trading using opposite S1YM34 and Fundo De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S1YM34 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 S1YM34 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.