Correlation Between LIFE CAPITAL and Mxima Renda

Can any of the company-specific risk be diversified away by investing in both LIFE CAPITAL and Mxima Renda 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 LIFE CAPITAL and Mxima Renda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LIFE CAPITAL PARTNERS and Mxima Renda Corporativa, you can compare the effects of market volatilities on LIFE CAPITAL and Mxima Renda 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 LIFE CAPITAL with a short position of Mxima Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE CAPITAL and Mxima Renda.

Diversification Opportunities for LIFE CAPITAL and Mxima Renda

0.77

Correlation Coefficient

LIFE CAPITAL  Mxima Renda

Poor diversification

The 3 months correlation between LIFE and Mxima is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LIFE CAPITAL PARTNERS and Mxima Renda Corporativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mxima Renda Corporativa and LIFE CAPITAL 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 LIFE CAPITAL PARTNERS are associated (or correlated) with Mxima Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mxima Renda Corporativa has no effect on the direction of LIFE CAPITAL i.e., LIFE CAPITAL and Mxima Renda go up and down completely randomly.

Pair Corralation between LIFE CAPITAL and Mxima Renda

Assuming the 90 days trading horizon LIFE CAPITAL is expected to generate 1.84 times less return on investment than Mxima Renda. But when comparing it to its historical volatility, LIFE CAPITAL PARTNERS is 2.19 times less risky than Mxima Renda. It trades about 0.08 of its potential returns per unit of risk. Mxima Renda Corporativa is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Mxima Renda Corporativa on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Mxima Renda Corporativa or generate 3.76% return on investment over 90 days.

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

LIFE CAPITAL PARTNERS  vs.  Mxima Renda Corporativa

LIFE CAPITAL PARTNERS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mxima Renda Corporativa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mxima Renda Corporativa has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Mxima Renda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LIFE CAPITAL and Mxima Renda

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

The idea behind LIFE CAPITAL PARTNERS and Mxima Renda Corporativa 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.