Correlation Between Fundo Investimento and Bradespar

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

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

Diversification Opportunities for Fundo Investimento and Bradespar

0.21

Correlation Coefficient

Fundo Investimento  Bradespar

Modest diversification

The 3 months correlation between Fundo and Bradespar is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investimento Imobiliario and Bradespar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bradespar SA and Fundo Investimento 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 Fundo Investimento Imobiliario are associated (or correlated) with Bradespar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bradespar SA has no effect on the direction of Fundo Investimento i.e., Fundo Investimento and Bradespar go up and down completely randomly.

Pair Corralation between Fundo Investimento and Bradespar

Assuming the 90 days trading horizon Fundo Investimento Imobiliario is expected to under-perform the Bradespar. But the fund apears to be less risky and, when comparing its historical volatility, Fundo Investimento Imobiliario is 1.18 times less risky than Bradespar. The fund trades about -0.15 of its potential returns per unit of risk. The Bradespar SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,695  in Bradespar SA on September 12, 2024 and sell it today you would earn a total of  30.00  from holding Bradespar SA or generate 1.77% return on investment over 90 days.

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

Fundo Investimento Imobiliario  vs.  Bradespar SA

Fundo Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Investimento Imobiliario has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's essential 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.

Bradespar SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bradespar SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bradespar is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fundo Investimento and Bradespar

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

The idea behind Fundo Investimento Imobiliario and Bradespar SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.