Correlation Between BK Variable and Naranja 2030

Can any of the company-specific risk be diversified away by investing in both BK Variable and Naranja 2030 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 BK Variable and Naranja 2030 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BK Variable Internacional and Naranja 2030 Pp, you can compare the effects of market volatilities on BK Variable and Naranja 2030 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 BK Variable with a short position of Naranja 2030. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Variable and Naranja 2030.

Diversification Opportunities for BK Variable and Naranja 2030

0.92

Correlation Coefficient

BK Variable  Naranja 2030

Almost no diversification

The 3 months correlation between 0P0000120T and Naranja is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding BK Variable Internacional and Naranja 2030 Pp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naranja 2030 Pp and BK Variable 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 BK Variable Internacional are associated (or correlated) with Naranja 2030. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naranja 2030 Pp has no effect on the direction of BK Variable i.e., BK Variable and Naranja 2030 go up and down completely randomly.

Pair Corralation between BK Variable and Naranja 2030

Assuming the 90 days trading horizon BK Variable Internacional is expected to under-perform the Naranja 2030. In addition to that, BK Variable is 4.04 times more volatile than Naranja 2030 Pp. It trades about -0.08 of its total potential returns per unit of risk. Naranja 2030 Pp is currently generating about -0.09 per unit of volatility. If you would invest  1,784  in Naranja 2030 Pp on October 12, 2024 and sell it today you would lose (5.00) from holding Naranja 2030 Pp or give up 0.28% of portfolio value over 90 days.

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

BK Variable Internacional  vs.  Naranja 2030 Pp

BK Variable Internacional

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BK Variable Internacional are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, BK Variable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Naranja 2030 Pp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Naranja 2030 Pp are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Naranja 2030 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BK Variable and Naranja 2030

The main advantage of trading using opposite BK Variable and Naranja 2030 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BK Variable position performs unexpectedly, Naranja 2030 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 Naranja 2030 will offset losses from the drop in Naranja 2030's long position.

The idea behind BK Variable Internacional and Naranja 2030 Pp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.