Correlation Between Fundo Investimento and TAL Education

Can any of the company-specific risk be diversified away by investing in both Fundo Investimento and TAL Education 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 TAL Education 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 TAL Education Group, you can compare the effects of market volatilities on Fundo Investimento and TAL Education 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 TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo Investimento and TAL Education.

Diversification Opportunities for Fundo Investimento and TAL Education

-0.26

Correlation Coefficient

Fundo Investimento  TAL Education

Very good diversification

The 3 months correlation between Fundo and TAL is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investimento Imobiliario and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group 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 TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Fundo Investimento i.e., Fundo Investimento and TAL Education go up and down completely randomly.

Pair Corralation between Fundo Investimento and TAL Education

Assuming the 90 days trading horizon Fundo Investimento Imobiliario is expected to under-perform the TAL Education. But the fund apears to be less risky and, when comparing its historical volatility, Fundo Investimento Imobiliario is 3.1 times less risky than TAL Education. The fund trades about -0.09 of its potential returns per unit of risk. The TAL Education Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  442.00  in TAL Education Group on September 19, 2024 and sell it today you would earn a total of  162.00  from holding TAL Education Group or generate 36.65% return on investment over 90 days.

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

Fundo Investimento Imobiliario  vs.  TAL Education Group

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 latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

TAL Education Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, TAL Education sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo Investimento and TAL Education

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

The idea behind Fundo Investimento Imobiliario and TAL Education Group 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.