Correlation Between HEDGE Brasil and NAVI CRDITO

Can any of the company-specific risk be diversified away by investing in both HEDGE Brasil and NAVI CRDITO 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 HEDGE Brasil and NAVI CRDITO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEDGE Brasil Shopping and NAVI CRDITO IMOBILIRIO, you can compare the effects of market volatilities on HEDGE Brasil and NAVI CRDITO 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 HEDGE Brasil with a short position of NAVI CRDITO. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEDGE Brasil and NAVI CRDITO.

Diversification Opportunities for HEDGE Brasil and NAVI CRDITO

0.48

Correlation Coefficient

HEDGE Brasil  NAVI CRDITO

Very weak diversification

The 3 months correlation between HEDGE and NAVI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE Brasil Shopping and NAVI CRDITO IMOBILIRIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAVI CRDITO IMOBILIRIO and HEDGE Brasil 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 HEDGE Brasil Shopping are associated (or correlated) with NAVI CRDITO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAVI CRDITO IMOBILIRIO has no effect on the direction of HEDGE Brasil i.e., HEDGE Brasil and NAVI CRDITO go up and down completely randomly.

Pair Corralation between HEDGE Brasil and NAVI CRDITO

Assuming the 90 days trading horizon HEDGE Brasil is expected to generate 2.05 times less return on investment than NAVI CRDITO. But when comparing it to its historical volatility, HEDGE Brasil Shopping is 2.68 times less risky than NAVI CRDITO. It trades about 0.03 of its potential returns per unit of risk. NAVI CRDITO IMOBILIRIO is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  800.00  in NAVI CRDITO IMOBILIRIO on December 4, 2024 and sell it today you would earn a total of  8.00  from holding NAVI CRDITO IMOBILIRIO or generate 1.0% return on investment over 90 days.

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

HEDGE Brasil Shopping  vs.  NAVI CRDITO IMOBILIRIO

HEDGE Brasil Shopping

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HEDGE Brasil Shopping are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental drivers, HEDGE Brasil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NAVI CRDITO IMOBILIRIO are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, NAVI CRDITO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HEDGE Brasil and NAVI CRDITO

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

The idea behind HEDGE Brasil Shopping and NAVI CRDITO IMOBILIRIO 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.