Correlation Between Fundos De and Mxima Renda

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

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

Diversification Opportunities for Fundos De and Mxima Renda

-0.37

Correlation Coefficient

Fundos De  Mxima Renda

Very good diversification

The 3 months correlation between Fundos and Mxima is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fundos de Investimento and Mxima Renda Corporativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mxima Renda Corporativa and Fundos 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 Fundos de Investimento are associated (or correlated) with Mxima Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mxima Renda Corporativa has no effect on the direction of Fundos De i.e., Fundos De and Mxima Renda go up and down completely randomly.

Pair Corralation between Fundos De and Mxima Renda

Assuming the 90 days trading horizon Fundos de Investimento is expected to generate 1.21 times more return on investment than Mxima Renda. However, Fundos De is 1.21 times more volatile than Mxima Renda Corporativa. It trades about 0.21 of its potential returns per unit of risk. Mxima Renda Corporativa is currently generating about -0.11 per unit of risk. If you would invest  4,002  in Fundos de Investimento on September 21, 2024 and sell it today you would earn a total of  1,097  from holding Fundos de Investimento or generate 27.41% return on investment over 90 days.

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

Fundos de Investimento  vs.  Mxima Renda Corporativa

Fundos de Investimento

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fundos de Investimento are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Fundos De sustained solid returns over the last few months and may actually be approaching a breakup point.

Mxima Renda Corporativa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mxima Renda Corporativa has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Fundos De and Mxima Renda

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

The idea behind Fundos de Investimento and Mxima Renda Corporativa 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..