Correlation Between BB Renda and SPARTA FIAGRO

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

Diversification Opportunities for BB Renda and SPARTA FIAGRO

0.65

Correlation Coefficient

BB Renda  SPARTA FIAGRO

Poor diversification

The 3 months correlation between BBRC11 and SPARTA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BB Renda Corporativa and SPARTA FIAGRO FDO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTA FIAGRO FDO 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 SPARTA FIAGRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTA FIAGRO FDO has no effect on the direction of BB Renda i.e., BB Renda and SPARTA FIAGRO go up and down completely randomly.

Pair Corralation between BB Renda and SPARTA FIAGRO

Assuming the 90 days trading horizon BB Renda Corporativa is expected to generate about the same return on investment as SPARTA FIAGRO FDO. However, BB Renda is 1.31 times more volatile than SPARTA FIAGRO FDO. It trades about 0.12 of its potential returns per unit of risk. SPARTA FIAGRO FDO is currently producing about 0.15 per unit of risk. If you would invest  8,630  in SPARTA FIAGRO FDO on December 29, 2024 and sell it today you would earn a total of  645.00  from holding SPARTA FIAGRO FDO or generate 7.47% return on investment over 90 days.

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

BB Renda Corporativa  vs.  SPARTA FIAGRO FDO

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.

SPARTA FIAGRO FDO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTA FIAGRO FDO are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, SPARTA FIAGRO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BB Renda and SPARTA FIAGRO

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

The idea behind BB Renda Corporativa and SPARTA FIAGRO FDO 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.