Correlation Between Fundo De and ConocoPhillips

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

By analyzing existing cross correlation between Fundo De Investimento and ConocoPhillips, you can compare the effects of market volatilities on Fundo De and ConocoPhillips 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 Fundo De with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and ConocoPhillips.

Diversification Opportunities for Fundo De and ConocoPhillips

-0.55

Correlation Coefficient

Fundo De  ConocoPhillips

Excellent diversification

The 3 months correlation between Fundo and ConocoPhillips is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fundo De Investimento and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Fundo De 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 Fundo De Investimento are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Fundo De i.e., Fundo De and ConocoPhillips go up and down completely randomly.

Pair Corralation between Fundo De and ConocoPhillips

Assuming the 90 days trading horizon Fundo De Investimento is expected to generate 1.39 times more return on investment than ConocoPhillips. However, Fundo De is 1.39 times more volatile than ConocoPhillips. It trades about 0.04 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.23 per unit of risk. If you would invest  20,807  in Fundo De Investimento on October 1, 2024 and sell it today you would earn a total of  293.00  from holding Fundo De Investimento or generate 1.41% return on investment over 90 days.

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

Fundo De Investimento  vs.  ConocoPhillips

Fundo De Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

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

ConocoPhillips

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fundo De and ConocoPhillips

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

The idea behind Fundo De Investimento and ConocoPhillips 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.