Correlation Between Fundo Investec and Plano Plano

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

Diversification Opportunities for Fundo Investec and Plano Plano

0.65

Correlation Coefficient

Fundo Investec  Plano Plano

Poor diversification

The 3 months correlation between Fundo and Plano is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investec IMB and Plano Plano Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plano Plano Desenvol 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 Plano Plano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plano Plano Desenvol has no effect on the direction of Fundo Investec i.e., Fundo Investec and Plano Plano go up and down completely randomly.

Pair Corralation between Fundo Investec and Plano Plano

Assuming the 90 days trading horizon Fundo Investec IMB is expected to generate 1.32 times more return on investment than Plano Plano. However, Fundo Investec is 1.32 times more volatile than Plano Plano Desenvolvimento. It trades about -0.05 of its potential returns per unit of risk. Plano Plano Desenvolvimento is currently generating about -0.14 per unit of risk. If you would invest  5,801  in Fundo Investec IMB on September 25, 2024 and sell it today you would lose (801.00) from holding Fundo Investec IMB or give up 13.81% of portfolio value over 90 days.

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

Fundo Investec IMB  vs.  Plano Plano Desenvolvimento

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.

Plano Plano Desenvol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plano Plano Desenvolvimento has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fundo Investec and Plano Plano

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

The idea behind Fundo Investec IMB and Plano Plano Desenvolvimento 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.