Correlation Between HEDGE OFFICE and NAVI CRDITO

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

Diversification Opportunities for HEDGE OFFICE and NAVI CRDITO

0.69

Correlation Coefficient

HEDGE OFFICE  NAVI CRDITO

Poor diversification

The 3 months correlation between HEDGE and NAVI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE OFFICE INCOME 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 OFFICE 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 OFFICE INCOME 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 OFFICE i.e., HEDGE OFFICE and NAVI CRDITO go up and down completely randomly.

Pair Corralation between HEDGE OFFICE and NAVI CRDITO

Assuming the 90 days trading horizon HEDGE OFFICE INCOME is expected to under-perform the NAVI CRDITO. In addition to that, HEDGE OFFICE is 1.26 times more volatile than NAVI CRDITO IMOBILIRIO. It trades about -0.12 of its total potential returns per unit of risk. NAVI CRDITO IMOBILIRIO is currently generating about -0.06 per unit of volatility. If you would invest  890.00  in NAVI CRDITO IMOBILIRIO on September 15, 2024 and sell it today you would lose (93.00) from holding NAVI CRDITO IMOBILIRIO or give up 10.45% of portfolio value over 90 days.

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

HEDGE OFFICE INCOME  vs.  NAVI CRDITO IMOBILIRIO

HEDGE OFFICE INCOME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEDGE OFFICE INCOME has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental 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.

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAVI CRDITO IMOBILIRIO has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with HEDGE OFFICE and NAVI CRDITO

The main advantage of trading using opposite HEDGE OFFICE and NAVI CRDITO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEDGE OFFICE 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 OFFICE INCOME 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.