Correlation Between Navigator and Benfica

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

By analyzing existing cross correlation between The Navigator and Benfica, you can compare the effects of market volatilities on Navigator and Benfica 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 Navigator with a short position of Benfica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator and Benfica.

Diversification Opportunities for Navigator and Benfica

0.18

Correlation Coefficient

Navigator  Benfica

Average diversification

The 3 months correlation between Navigator and Benfica is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The Navigator and Benfica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benfica and Navigator 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 The Navigator are associated (or correlated) with Benfica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benfica has no effect on the direction of Navigator i.e., Navigator and Benfica go up and down completely randomly.

Pair Corralation between Navigator and Benfica

Assuming the 90 days trading horizon The Navigator is expected to under-perform the Benfica. But the stock apears to be less risky and, when comparing its historical volatility, The Navigator is 3.58 times less risky than Benfica. The stock trades about -0.23 of its potential returns per unit of risk. The Benfica is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  305.00  in Benfica on September 16, 2024 and sell it today you would earn a total of  22.00  from holding Benfica or generate 7.21% return on investment over 90 days.

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

The Navigator  vs.  Benfica

Navigator

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Navigator has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Navigator is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Benfica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Benfica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Benfica is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Navigator and Benfica

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

The idea behind The Navigator and Benfica 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.