Correlation Between Fundo De and ConocoPhillips

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

By analyzing existing cross correlation between Fundo de Investimento and ConocoPhillips, you can compare the effects of market volatilities on Fundo De and ConocoPhillips 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 Fundo De with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and ConocoPhillips.

Diversification Opportunities for Fundo De and ConocoPhillips

-0.31

Correlation Coefficient

Fundo De  ConocoPhillips

Very good diversification

The 3 months correlation between Fundo and ConocoPhillips is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Fundo De 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 Fundo de Investimento are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Fundo De i.e., Fundo De and ConocoPhillips go up and down completely randomly.

Pair Corralation between Fundo De and ConocoPhillips

Assuming the 90 days trading horizon Fundo de Investimento is expected to under-perform the ConocoPhillips. But the fund apears to be less risky and, when comparing its historical volatility, Fundo de Investimento is 1.28 times less risky than ConocoPhillips. The fund trades about -0.2 of its potential returns per unit of risk. The ConocoPhillips is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  5,161  in ConocoPhillips on September 25, 2024 and sell it today you would lose (217.00) from holding ConocoPhillips or give up 4.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Fundo de Investimento  vs.  ConocoPhillips

Fundo de Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

ConocoPhillips

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fundo De and ConocoPhillips

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

The idea behind Fundo de Investimento and ConocoPhillips 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.