Correlation Between Fondo Mutuo and AFP Planvital

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

By analyzing existing cross correlation between Fondo Mutuo ETF and AFP Planvital SA, you can compare the effects of market volatilities on Fondo Mutuo and AFP Planvital 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 Fondo Mutuo with a short position of AFP Planvital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fondo Mutuo and AFP Planvital.

Diversification Opportunities for Fondo Mutuo and AFP Planvital

-0.1

Correlation Coefficient

Fondo Mutuo  AFP Planvital

Good diversification

The 3 months correlation between Fondo and AFP is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fondo Mutuo ETF and AFP Planvital SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFP Planvital SA and Fondo Mutuo 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 Fondo Mutuo ETF are associated (or correlated) with AFP Planvital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFP Planvital SA has no effect on the direction of Fondo Mutuo i.e., Fondo Mutuo and AFP Planvital go up and down completely randomly.

Pair Corralation between Fondo Mutuo and AFP Planvital

Assuming the 90 days trading horizon Fondo Mutuo ETF is expected to generate 1.18 times more return on investment than AFP Planvital. However, Fondo Mutuo is 1.18 times more volatile than AFP Planvital SA. It trades about 0.12 of its potential returns per unit of risk. AFP Planvital SA is currently generating about 0.1 per unit of risk. If you would invest  133,033  in Fondo Mutuo ETF on September 12, 2024 and sell it today you would earn a total of  6,187  from holding Fondo Mutuo ETF or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fondo Mutuo ETF  vs.  AFP Planvital SA

Fondo Mutuo ETF

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fondo Mutuo ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Fondo Mutuo is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

AFP Planvital SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AFP Planvital SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, AFP Planvital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fondo Mutuo and AFP Planvital

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

The idea behind Fondo Mutuo ETF and AFP Planvital SA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.