Correlation Between Fator IFIX and Ultrapar Participaes

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

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

Diversification Opportunities for Fator IFIX and Ultrapar Participaes

0.0

Correlation Coefficient

Fator IFIX  Ultrapar Participaes

Pay attention - limited upside

The 3 months correlation between Fator and Ultrapar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fator IFIX Fundo and Ultrapar Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participaes and Fator IFIX 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 Fator IFIX Fundo are associated (or correlated) with Ultrapar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participaes has no effect on the direction of Fator IFIX i.e., Fator IFIX and Ultrapar Participaes go up and down completely randomly.

Pair Corralation between Fator IFIX and Ultrapar Participaes

If you would invest  8,578  in Fator IFIX Fundo on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Fator IFIX Fundo or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Fator IFIX Fundo  vs.  Ultrapar Participaes SA

Fator IFIX Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ultrapar Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrapar Participaes SA 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fator IFIX and Ultrapar Participaes

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

The idea behind Fator IFIX Fundo and Ultrapar Participaes 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..