Correlation Between Engie Brasil and FDO INV

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

By analyzing existing cross correlation between Engie Brasil Energia and FDO INV IMOB, you can compare the effects of market volatilities on Engie Brasil and FDO INV 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 Engie Brasil with a short position of FDO INV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and FDO INV.

Diversification Opportunities for Engie Brasil and FDO INV

-0.44

Correlation Coefficient

Engie Brasil  FDO INV

Very good diversification

The 3 months correlation between Engie and FDO is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and FDO INV IMOB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV IMOB and Engie Brasil 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 Engie Brasil Energia are associated (or correlated) with FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV IMOB has no effect on the direction of Engie Brasil i.e., Engie Brasil and FDO INV go up and down completely randomly.

Pair Corralation between Engie Brasil and FDO INV

Assuming the 90 days trading horizon Engie Brasil Energia is expected to under-perform the FDO INV. In addition to that, Engie Brasil is 37.64 times more volatile than FDO INV IMOB. It trades about -0.24 of its total potential returns per unit of risk. FDO INV IMOB is currently generating about -0.23 per unit of volatility. If you would invest  144,490  in FDO INV IMOB on October 11, 2024 and sell it today you would lose (240.00) from holding FDO INV IMOB or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Engie Brasil Energia  vs.  FDO INV IMOB

Engie Brasil Energia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie Brasil Energia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Engie Brasil and FDO INV

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

The idea behind Engie Brasil Energia and FDO INV IMOB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.