Correlation Between NAVI CRDITO and Fator IFIX

Can any of the company-specific risk be diversified away by investing in both NAVI CRDITO and Fator IFIX 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 Fator IFIX 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 Fator IFIX Fundo, you can compare the effects of market volatilities on NAVI CRDITO and Fator IFIX 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 Fator IFIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAVI CRDITO and Fator IFIX.

Diversification Opportunities for NAVI CRDITO and Fator IFIX

0.73

Correlation Coefficient

NAVI CRDITO  Fator IFIX

Poor diversification

The 3 months correlation between NAVI and Fator is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NAVI CRDITO IMOBILIRIO and Fator IFIX Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fator IFIX Fundo 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 Fator IFIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fator IFIX Fundo has no effect on the direction of NAVI CRDITO i.e., NAVI CRDITO and Fator IFIX go up and down completely randomly.

Pair Corralation between NAVI CRDITO and Fator IFIX

Assuming the 90 days trading horizon NAVI CRDITO IMOBILIRIO is expected to generate 1.36 times more return on investment than Fator IFIX. However, NAVI CRDITO is 1.36 times more volatile than Fator IFIX Fundo. It trades about 0.1 of its potential returns per unit of risk. Fator IFIX Fundo is currently generating about -0.12 per unit of risk. If you would invest  783.00  in NAVI CRDITO IMOBILIRIO on October 23, 2024 and sell it today you would earn a total of  36.00  from holding NAVI CRDITO IMOBILIRIO or generate 4.6% return on investment over 90 days.

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

NAVI CRDITO IMOBILIRIO  vs.  Fator IFIX Fundo

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fator IFIX Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fator IFIX Fundo 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.

Pair Trading with NAVI CRDITO and Fator IFIX

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

The idea behind NAVI CRDITO IMOBILIRIO and Fator IFIX Fundo 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.