Correlation Between FDO INV and CXFI Caixa

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

By analyzing existing cross correlation between FDO INV IMOB and CXFI Caixa, you can compare the effects of market volatilities on FDO INV and CXFI Caixa 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 FDO INV with a short position of CXFI Caixa. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDO INV and CXFI Caixa.

Diversification Opportunities for FDO INV and CXFI Caixa

0.26

Correlation Coefficient

FDO INV  CXFI Caixa

Modest diversification

The 3 months correlation between FDO and CXFI is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV IMOB and CXFI Caixa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CXFI Caixa and FDO INV 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 FDO INV IMOB are associated (or correlated) with CXFI Caixa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CXFI Caixa has no effect on the direction of FDO INV i.e., FDO INV and CXFI Caixa go up and down completely randomly.

Pair Corralation between FDO INV and CXFI Caixa

Assuming the 90 days trading horizon FDO INV IMOB is expected to generate 0.05 times more return on investment than CXFI Caixa. However, FDO INV IMOB is 21.16 times less risky than CXFI Caixa. It trades about 0.26 of its potential returns per unit of risk. CXFI Caixa is currently generating about -0.02 per unit of risk. If you would invest  141,345  in FDO INV IMOB on December 30, 2024 and sell it today you would earn a total of  2,905  from holding FDO INV IMOB or generate 2.06% return on investment over 90 days.

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

FDO INV IMOB  vs.  CXFI Caixa

FDO INV IMOB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, FDO INV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CXFI Caixa

Risk-Adjusted Performance

Very Weak

Over the last 90 days CXFI Caixa has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CXFI Caixa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FDO INV and CXFI Caixa

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

The idea behind FDO INV IMOB and CXFI Caixa 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.