Correlation Between Fras Le and Nu Renda

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

By analyzing existing cross correlation between Fras le SA and Nu Renda Ibov, you can compare the effects of market volatilities on Fras Le and Nu 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 Fras Le with a short position of Nu Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Nu Renda.

Diversification Opportunities for Fras Le and Nu Renda

0.26

Correlation Coefficient

Fras Le  Nu Renda

Modest diversification

The 3 months correlation between Fras and NDIV11 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Nu Renda Ibov in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Renda Ibov and Fras Le 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 Fras le SA are associated (or correlated) with Nu Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Renda Ibov has no effect on the direction of Fras Le i.e., Fras Le and Nu Renda go up and down completely randomly.

Pair Corralation between Fras Le and Nu Renda

Assuming the 90 days trading horizon Fras le SA is expected to generate 1.6 times more return on investment than Nu Renda. However, Fras Le is 1.6 times more volatile than Nu Renda Ibov. It trades about -0.02 of its potential returns per unit of risk. Nu Renda Ibov is currently generating about -0.22 per unit of risk. If you would invest  2,083  in Fras le SA on October 6, 2024 and sell it today you would lose (45.00) from holding Fras le SA or give up 2.16% of portfolio value over 90 days.

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

Fras le SA  vs.  Nu Renda Ibov

Fras le SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fras le SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fras Le is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nu Renda Ibov

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fras Le and Nu Renda

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

The idea behind Fras le SA and Nu Renda Ibov 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..