Correlation Between Fundo Investec and ConocoPhillips

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

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

Diversification Opportunities for Fundo Investec and ConocoPhillips

-0.2

Correlation Coefficient

Fundo Investec  ConocoPhillips

Good diversification

The 3 months correlation between Fundo and ConocoPhillips is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investec IMB and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Fundo Investec 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 Investec IMB are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Fundo Investec i.e., Fundo Investec and ConocoPhillips go up and down completely randomly.

Pair Corralation between Fundo Investec and ConocoPhillips

Assuming the 90 days trading horizon Fundo Investec IMB is expected to under-perform the ConocoPhillips. In addition to that, Fundo Investec is 1.67 times more volatile than ConocoPhillips. It trades about -0.05 of its total potential returns per unit of risk. ConocoPhillips is currently generating about 0.03 per unit of volatility. If you would invest  4,830  in ConocoPhillips on September 25, 2024 and sell it today you would earn a total of  114.00  from holding ConocoPhillips or generate 2.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Fundo Investec IMB  vs.  ConocoPhillips

Fundo Investec IMB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Investec IMB 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.

ConocoPhillips

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fundo Investec and ConocoPhillips

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

The idea behind Fundo Investec IMB and ConocoPhillips 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.