Correlation Between FDO INV and XP Corporate

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

Diversification Opportunities for FDO INV and XP Corporate

-0.32

Correlation Coefficient

FDO INV  XP Corporate

Very good diversification

The 3 months correlation between FDO and XPCM11 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV IMOB and XP Corporate Maca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XP Corporate Maca 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 XP Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XP Corporate Maca has no effect on the direction of FDO INV i.e., FDO INV and XP Corporate go up and down completely randomly.

Pair Corralation between FDO INV and XP Corporate

Assuming the 90 days trading horizon FDO INV IMOB is expected to generate 43.33 times more return on investment than XP Corporate. However, FDO INV is 43.33 times more volatile than XP Corporate Maca. It trades about 0.07 of its potential returns per unit of risk. XP Corporate Maca is currently generating about -0.12 per unit of risk. If you would invest  19.00  in FDO INV IMOB on October 10, 2024 and sell it today you would earn a total of  144,231  from holding FDO INV IMOB or generate 759110.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.02%
Values	Daily Returns

FDO INV IMOB  vs.  XP Corporate Maca

FDO INV IMOB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 9 (%) 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.

XP Corporate Maca

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XP Corporate Maca has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental indicators, XP Corporate 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 XP Corporate

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

The idea behind FDO INV IMOB and XP Corporate Maca 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.