Correlation Between Fibra UNO and Fibra Terrafina

Can any of the company-specific risk be diversified away by investing in both Fibra UNO 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 UNO 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 UNO and Fibra Terrafina, you can compare the effects of market volatilities on Fibra UNO 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 UNO with a short position of Fibra Terrafina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fibra UNO and Fibra Terrafina.

Diversification Opportunities for Fibra UNO and Fibra Terrafina

0.55

Correlation Coefficient

Fibra UNO  Fibra Terrafina

Very weak diversification

The 3 months correlation between Fibra and Fibra is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fibra UNO and Fibra Terrafina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Terrafina and Fibra UNO 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 UNO 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 UNO i.e., Fibra UNO and Fibra Terrafina go up and down completely randomly.

Pair Corralation between Fibra UNO and Fibra Terrafina

Assuming the 90 days trading horizon Fibra UNO is expected to generate 6.26 times less return on investment than Fibra Terrafina. But when comparing it to its historical volatility, Fibra UNO is 1.16 times less risky than Fibra Terrafina. It trades about 0.0 of its potential returns per unit of risk. Fibra Terrafina is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,761  in Fibra Terrafina on October 11, 2024 and sell it today you would earn a total of  499.00  from holding Fibra Terrafina or generate 18.07% return on investment over 90 days.

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

Fibra UNO  vs.  Fibra Terrafina

Fibra UNO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fibra UNO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic 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 company 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 UNO and Fibra Terrafina

The main advantage of trading using opposite Fibra UNO and Fibra Terrafina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fibra UNO 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 UNO 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.