Correlation Between HEDGE Brasil and VF

Can any of the company-specific risk be diversified away by investing in both HEDGE Brasil and VF 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 VF 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 VF Corporation, you can compare the effects of market volatilities on HEDGE Brasil and VF 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 VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEDGE Brasil and VF.

Diversification Opportunities for HEDGE Brasil and VF

-0.76

Correlation Coefficient

HEDGE Brasil  VF

Pay attention - limited upside

The 3 months correlation between HEDGE and VF is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE Brasil Shopping and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of HEDGE Brasil i.e., HEDGE Brasil and VF go up and down completely randomly.

Pair Corralation between HEDGE Brasil and VF

Assuming the 90 days trading horizon HEDGE Brasil Shopping is expected to generate 0.21 times more return on investment than VF. However, HEDGE Brasil Shopping is 4.68 times less risky than VF. It trades about 0.14 of its potential returns per unit of risk. VF Corporation is currently generating about -0.12 per unit of risk. If you would invest  17,817  in HEDGE Brasil Shopping on December 23, 2024 and sell it today you would earn a total of  1,383  from holding HEDGE Brasil Shopping or generate 7.76% return on investment over 90 days.

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

HEDGE Brasil Shopping  vs.  VF Corp.

HEDGE Brasil Shopping

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HEDGE Brasil Shopping are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental drivers, HEDGE Brasil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VF Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days VF Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HEDGE Brasil and VF

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

The idea behind HEDGE Brasil Shopping and VF Corporation 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.