Correlation Between FIBRA Prologis and Fibra Terrafina

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

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

Diversification Opportunities for FIBRA Prologis and Fibra Terrafina

0.56

Correlation Coefficient

FIBRA Prologis  Fibra Terrafina

Very weak diversification

The 3 months correlation between FIBRA and Fibra is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Prologis and Fibra Terrafina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Terrafina and FIBRA Prologis 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 FIBRA Prologis are associated (or correlated) with Fibra Terrafina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Terrafina has no effect on the direction of FIBRA Prologis i.e., FIBRA Prologis and Fibra Terrafina go up and down completely randomly.

Pair Corralation between FIBRA Prologis and Fibra Terrafina

Assuming the 90 days trading horizon FIBRA Prologis is expected to under-perform the Fibra Terrafina. But the stock apears to be less risky and, when comparing its historical volatility, FIBRA Prologis is 2.45 times less risky than Fibra Terrafina. The stock trades about -0.19 of its potential returns per unit of risk. The Fibra Terrafina is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,784  in Fibra Terrafina on October 11, 2024 and sell it today you would lose (524.00) from holding Fibra Terrafina or give up 13.85% of portfolio value over 90 days.

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

FIBRA Prologis  vs.  Fibra Terrafina

FIBRA Prologis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIBRA Prologis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Fibra Terrafina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fibra Terrafina has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with FIBRA Prologis and Fibra Terrafina

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

The idea behind FIBRA Prologis and Fibra Terrafina 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.