Correlation Between Mxima Renda and LIFE CAPITAL

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

By analyzing existing cross correlation between Mxima Renda Corporativa and LIFE CAPITAL PARTNERS, you can compare the effects of market volatilities on Mxima Renda and LIFE CAPITAL 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 Mxima Renda with a short position of LIFE CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mxima Renda and LIFE CAPITAL.

Diversification Opportunities for Mxima Renda and LIFE CAPITAL

0.61

Correlation Coefficient

Mxima Renda  LIFE CAPITAL

Poor diversification

The 3 months correlation between Mxima and LIFE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mxima Renda Corporativa and LIFE CAPITAL PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE CAPITAL PARTNERS and Mxima 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 Mxima Renda Corporativa are associated (or correlated) with LIFE CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE CAPITAL PARTNERS has no effect on the direction of Mxima Renda i.e., Mxima Renda and LIFE CAPITAL go up and down completely randomly.

Pair Corralation between Mxima Renda and LIFE CAPITAL

Assuming the 90 days trading horizon Mxima Renda Corporativa is expected to generate 1.23 times more return on investment than LIFE CAPITAL. However, Mxima Renda is 1.23 times more volatile than LIFE CAPITAL PARTNERS. It trades about 0.07 of its potential returns per unit of risk. LIFE CAPITAL PARTNERS is currently generating about 0.04 per unit of risk. If you would invest  127.00  in Mxima Renda Corporativa on October 23, 2024 and sell it today you would earn a total of  6.00  from holding Mxima Renda Corporativa or generate 4.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Mxima Renda Corporativa  vs.  LIFE CAPITAL PARTNERS

Mxima Renda Corporativa

Risk-Adjusted Performance

0 of 100

Very Weak

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

LIFE CAPITAL PARTNERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFE CAPITAL PARTNERS 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mxima Renda and LIFE CAPITAL

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

The idea behind Mxima Renda Corporativa and LIFE CAPITAL PARTNERS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.