Correlation Between FDO INV and BS2 ALLINVESTMENTS

Can any of the company-specific risk be diversified away by investing in both FDO INV and BS2 ALLINVESTMENTS 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 BS2 ALLINVESTMENTS 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 BS2 ALLINVESTMENTS FDO, you can compare the effects of market volatilities on FDO INV and BS2 ALLINVESTMENTS 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 BS2 ALLINVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDO INV and BS2 ALLINVESTMENTS.

Diversification Opportunities for FDO INV and BS2 ALLINVESTMENTS

0.28

Correlation Coefficient

FDO INV  BS2 ALLINVESTMENTS

Modest diversification

The 3 months correlation between FDO and BS2 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV IMOB and BS2 ALLINVESTMENTS FDO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BS2 ALLINVESTMENTS FDO 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 BS2 ALLINVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BS2 ALLINVESTMENTS FDO has no effect on the direction of FDO INV i.e., FDO INV and BS2 ALLINVESTMENTS go up and down completely randomly.

Pair Corralation between FDO INV and BS2 ALLINVESTMENTS

Assuming the 90 days trading horizon FDO INV is expected to generate 2.28 times less return on investment than BS2 ALLINVESTMENTS. But when comparing it to its historical volatility, FDO INV IMOB is 1.03 times less risky than BS2 ALLINVESTMENTS. It trades about 0.05 of its potential returns per unit of risk. BS2 ALLINVESTMENTS FDO is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,782  in BS2 ALLINVESTMENTS FDO on September 21, 2024 and sell it today you would earn a total of  955.00  from holding BS2 ALLINVESTMENTS FDO or generate 14.08% 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.  BS2 ALLINVESTMENTS FDO

FDO INV IMOB

Risk-Adjusted Performance

12 of 100

Good

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

BS2 ALLINVESTMENTS FDO

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BS2 ALLINVESTMENTS FDO are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, BS2 ALLINVESTMENTS 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 BS2 ALLINVESTMENTS

The main advantage of trading using opposite FDO INV and BS2 ALLINVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FDO INV position performs unexpectedly, BS2 ALLINVESTMENTS 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 BS2 ALLINVESTMENTS will offset losses from the drop in BS2 ALLINVESTMENTS's long position.

The idea behind FDO INV IMOB and BS2 ALLINVESTMENTS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.