Correlation Between Loft II and MPM Corpreos
Can any of the company-specific risk be diversified away by investing in both Loft II and MPM Corpreos 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 Loft II and MPM Corpreos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loft II Fundo and MPM Corpreos SA, you can compare the effects of market volatilities on Loft II and MPM Corpreos 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 Loft II with a short position of MPM Corpreos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loft II and MPM Corpreos.
Diversification Opportunities for Loft II and MPM Corpreos
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loft and MPM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Loft II Fundo and MPM Corpreos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPM Corpreos SA and Loft II 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 Loft II Fundo are associated (or correlated) with MPM Corpreos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPM Corpreos SA has no effect on the direction of Loft II i.e., Loft II and MPM Corpreos go up and down completely randomly.
Pair Corralation between Loft II and MPM Corpreos
Assuming the 90 days trading horizon Loft II Fundo is expected to generate 0.9 times more return on investment than MPM Corpreos. However, Loft II Fundo is 1.11 times less risky than MPM Corpreos. It trades about 0.07 of its potential returns per unit of risk. MPM Corpreos SA is currently generating about -0.26 per unit of risk. If you would invest 800.00 in Loft II Fundo on October 4, 2024 and sell it today you would earn a total of 20.00 from holding Loft II Fundo or generate 2.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Loft II Fundo vs. MPM Corpreos SA
Performance |
Timeline |
Loft II Fundo |
MPM Corpreos SA |
Loft II and MPM Corpreos Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Loft II and MPM Corpreos
The main advantage of trading using opposite Loft II and MPM Corpreos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loft II position performs unexpectedly, MPM Corpreos 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 MPM Corpreos will offset losses from the drop in MPM Corpreos' long position.Loft II vs. Fundo Investimento Imobiliario | Loft II vs. Fras le SA | Loft II vs. Clave Indices De | Loft II vs. BTG Pactual Logstica |
MPM Corpreos vs. Mliuz SA | MPM Corpreos vs. Lojas Quero Quero SA | MPM Corpreos vs. Neogrid Participaes SA | MPM Corpreos vs. Pet Center Comrcio |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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