Correlation Between Ultrapar Participacoes and Icahn Enterprises

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

By analyzing existing cross correlation between Ultrapar Participacoes SA and Icahn Enterprises LP, you can compare the effects of market volatilities on Ultrapar Participacoes and Icahn Enterprises 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 Ultrapar Participacoes with a short position of Icahn Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrapar Participacoes and Icahn Enterprises.

Diversification Opportunities for Ultrapar Participacoes and Icahn Enterprises

0.55

Correlation Coefficient

Ultrapar Participacoes  Icahn Enterprises

Very weak diversification

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

Pair Corralation between Ultrapar Participacoes and Icahn Enterprises

Considering the 90-day investment horizon Ultrapar Participacoes SA is expected to generate 1.56 times more return on investment than Icahn Enterprises. However, Ultrapar Participacoes is 1.56 times more volatile than Icahn Enterprises LP. It trades about -0.25 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about -0.48 per unit of risk. If you would invest  324.00  in Ultrapar Participacoes SA on September 17, 2024 and sell it today you would lose (48.00) from holding Ultrapar Participacoes SA or give up 14.81% of portfolio value over 90 days.

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

Ultrapar Participacoes SA  vs.  Icahn Enterprises LP

Ultrapar Participacoes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrapar Participacoes SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Icahn Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icahn Enterprises LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ultrapar Participacoes and Icahn Enterprises

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

The idea behind Ultrapar Participacoes SA and Icahn Enterprises LP 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.