Correlation Between R Co and BGF World

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

By analyzing existing cross correlation between R co Valor F and BGF World Gold, you can compare the effects of market volatilities on R Co and BGF World 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 R Co with a short position of BGF World. Check out your portfolio center. Please also check ongoing floating volatility patterns of R Co and BGF World.

Diversification Opportunities for R Co and BGF World

0.0

Correlation Coefficient

R Co  BGF World

Pay attention - limited upside

The 3 months correlation between 0P00017SX2 and BGF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding R co Valor F and BGF World Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF World Gold and R Co 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 R co Valor F are associated (or correlated) with BGF World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF World Gold has no effect on the direction of R Co i.e., R Co and BGF World go up and down completely randomly.

Pair Corralation between R Co and BGF World

If you would invest  306,748  in R co Valor F on October 22, 2024 and sell it today you would earn a total of  1,099  from holding R co Valor F or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

R co Valor F  vs.  BGF World Gold

R co Valor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in R co Valor F are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, R Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BGF World Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGF World Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, BGF World is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with R Co and BGF World

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

The idea behind R co Valor F and BGF World Gold 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.