Correlation Between BB Renda and Fundo Investimento

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

Diversification Opportunities for BB Renda and Fundo Investimento

0.79

Correlation Coefficient

BB Renda  Fundo Investimento

Poor diversification

The 3 months correlation between BBRC11 and Fundo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BB Renda Corporativa and Fundo Investimento Imobiliario in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Investimento 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 Fundo Investimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Investimento has no effect on the direction of BB Renda i.e., BB Renda and Fundo Investimento go up and down completely randomly.

Pair Corralation between BB Renda and Fundo Investimento

Assuming the 90 days trading horizon BB Renda Corporativa is expected to under-perform the Fundo Investimento. In addition to that, BB Renda is 1.18 times more volatile than Fundo Investimento Imobiliario. It trades about -0.1 of its total potential returns per unit of risk. Fundo Investimento Imobiliario is currently generating about -0.12 per unit of volatility. If you would invest  9,119  in Fundo Investimento Imobiliario on September 16, 2024 and sell it today you would lose (980.00) from holding Fundo Investimento Imobiliario or give up 10.75% of portfolio value over 90 days.

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

BB Renda Corporativa  vs.  Fundo Investimento Imobiliario

BB Renda Corporativa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Renda Corporativa has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fundo Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Investimento Imobiliario has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with BB Renda and Fundo Investimento

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

The idea behind BB Renda Corporativa and Fundo Investimento Imobiliario 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.