Correlation Between METISA Metalrgica and Fundo Investimento

Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica and Fundo Investimento 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 METISA Metalrgica and Fundo Investimento into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between METISA Metalrgica Timboense and Fundo Investimento Imobiliario, you can compare the effects of market volatilities on METISA Metalrgica and Fundo Investimento 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 METISA Metalrgica with a short position of Fundo Investimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Fundo Investimento.

Diversification Opportunities for METISA Metalrgica and Fundo Investimento

0.9

Correlation Coefficient

METISA Metalrgica  Fundo Investimento

Almost no diversification

The 3 months correlation between METISA and Fundo is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Fundo Investimento Imobiliario in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Investimento and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with Fundo Investimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Investimento has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Fundo Investimento go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Fundo Investimento

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the Fundo Investimento. In addition to that, METISA Metalrgica is 3.43 times more volatile than Fundo Investimento Imobiliario. It trades about -0.1 of its total potential returns per unit of risk. Fundo Investimento Imobiliario is currently generating about -0.12 per unit of volatility. If you would invest  9,483  in Fundo Investimento Imobiliario on September 3, 2024 and sell it today you would lose (459.00) from holding Fundo Investimento Imobiliario or give up 4.84% of portfolio value over 90 days.

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

METISA Metalrgica Timboense  vs.  Fundo Investimento Imobiliario

METISA Metalrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METISA Metalrgica Timboense has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fundo Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with METISA Metalrgica and Fundo Investimento

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

The idea behind METISA Metalrgica Timboense and Fundo Investimento Imobiliario 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..