Correlation Between LESTE FDO and NAVI CRDITO

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

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

Diversification Opportunities for LESTE FDO and NAVI CRDITO

0.52

Correlation Coefficient

LESTE FDO  NAVI CRDITO

Very weak diversification

The 3 months correlation between LESTE and NAVI is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV 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 LESTE FDO 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 LESTE FDO INV 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 LESTE FDO i.e., LESTE FDO and NAVI CRDITO go up and down completely randomly.

Pair Corralation between LESTE FDO and NAVI CRDITO

Assuming the 90 days trading horizon LESTE FDO INV is expected to generate 0.41 times more return on investment than NAVI CRDITO. However, LESTE FDO INV is 2.42 times less risky than NAVI CRDITO. It trades about 0.18 of its potential returns per unit of risk. NAVI CRDITO IMOBILIRIO is currently generating about -0.01 per unit of risk. If you would invest  6,601  in LESTE FDO INV on December 30, 2024 and sell it today you would earn a total of  978.00  from holding LESTE FDO INV or generate 14.82% return on investment over 90 days.

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

LESTE FDO INV  vs.  NAVI CRDITO IMOBILIRIO

LESTE FDO INV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LESTE FDO INV are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, LESTE FDO sustained solid returns over the last few months and may actually be approaching a breakup point.

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAVI CRDITO IMOBILIRIO has generated negative risk-adjusted returns adding no value to fund investors. 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 LESTE FDO and NAVI CRDITO

The main advantage of trading using opposite LESTE FDO and NAVI CRDITO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESTE FDO 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 LESTE FDO INV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.