Correlation Between NAVI CRDITO and LESTE FDO

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

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

Diversification Opportunities for NAVI CRDITO and LESTE FDO

0.52

Correlation Coefficient

NAVI CRDITO  LESTE FDO

Very weak diversification

The 3 months correlation between NAVI and LESTE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding NAVI CRDITO IMOBILIRIO and LESTE FDO INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LESTE FDO INV and NAVI CRDITO 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 NAVI CRDITO IMOBILIRIO are associated (or correlated) with LESTE FDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LESTE FDO INV has no effect on the direction of NAVI CRDITO i.e., NAVI CRDITO and LESTE FDO go up and down completely randomly.

Pair Corralation between NAVI CRDITO and LESTE FDO

Assuming the 90 days trading horizon NAVI CRDITO IMOBILIRIO is expected to under-perform the LESTE FDO. In addition to that, NAVI CRDITO is 2.42 times more volatile than LESTE FDO INV. It trades about -0.01 of its total potential returns per unit of risk. LESTE FDO INV is currently generating about 0.18 per unit of volatility. 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

NAVI CRDITO IMOBILIRIO  vs.  LESTE FDO INV

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.

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.

Pair Trading with NAVI CRDITO and LESTE FDO

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

The idea behind NAVI CRDITO IMOBILIRIO and LESTE FDO INV 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.