Correlation Between Naranja 2030 and BK Variable

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

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

Diversification Opportunities for Naranja 2030 and BK Variable

0.92

Correlation Coefficient

Naranja 2030  BK Variable

Almost no diversification

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

Pair Corralation between Naranja 2030 and BK Variable

Assuming the 90 days trading horizon Naranja 2030 Pp is expected to generate 0.25 times more return on investment than BK Variable. However, Naranja 2030 Pp is 4.04 times less risky than BK Variable. It trades about -0.09 of its potential returns per unit of risk. BK Variable Internacional is currently generating about -0.08 per unit of risk. 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

Naranja 2030 Pp  vs.  BK Variable Internacional

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.

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.

Pair Trading with Naranja 2030 and BK Variable

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

The idea behind Naranja 2030 Pp and BK Variable Internacional 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.