Correlation Between BB Renda and ASA METROPOLIS

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

By analyzing existing cross correlation between BB Renda Corporativa and ASA METROPOLIS FUNDO, you can compare the effects of market volatilities on BB Renda and ASA METROPOLIS 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 BB Renda with a short position of ASA METROPOLIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Renda and ASA METROPOLIS.

Diversification Opportunities for BB Renda and ASA METROPOLIS

0.51

Correlation Coefficient

BB Renda  ASA METROPOLIS

Very weak diversification

The 3 months correlation between BBRC11 and ASA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BB Renda Corporativa and ASA METROPOLIS FUNDO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASA METROPOLIS FUNDO and BB Renda 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 BB Renda Corporativa are associated (or correlated) with ASA METROPOLIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASA METROPOLIS FUNDO has no effect on the direction of BB Renda i.e., BB Renda and ASA METROPOLIS go up and down completely randomly.

Pair Corralation between BB Renda and ASA METROPOLIS

Assuming the 90 days trading horizon BB Renda is expected to generate 1.02 times less return on investment than ASA METROPOLIS. But when comparing it to its historical volatility, BB Renda Corporativa is 3.91 times less risky than ASA METROPOLIS. It trades about 0.12 of its potential returns per unit of risk. ASA METROPOLIS FUNDO is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,430  in ASA METROPOLIS FUNDO on December 28, 2024 and sell it today you would earn a total of  89.00  from holding ASA METROPOLIS FUNDO or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

BB Renda Corporativa  vs.  ASA METROPOLIS FUNDO

BB Renda Corporativa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BB Renda Corporativa are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, BB Renda may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ASA METROPOLIS FUNDO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASA METROPOLIS FUNDO are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak primary indicators, ASA METROPOLIS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BB Renda and ASA METROPOLIS

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

The idea behind BB Renda Corporativa and ASA METROPOLIS FUNDO 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.