Correlation Between Patria Investments and VF

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

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

Diversification Opportunities for Patria Investments and VF

0.75

Correlation Coefficient

Patria Investments  VF

Poor diversification

The 3 months correlation between Patria and VF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments Limited and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation and Patria Investments 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 Patria Investments Limited are associated (or correlated) with VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Patria Investments i.e., Patria Investments and VF go up and down completely randomly.

Pair Corralation between Patria Investments and VF

Assuming the 90 days trading horizon Patria Investments is expected to generate 10.57 times less return on investment than VF. But when comparing it to its historical volatility, Patria Investments Limited is 3.06 times less risky than VF. It trades about 0.02 of its potential returns per unit of risk. VF Corporation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,965  in VF Corporation on October 9, 2024 and sell it today you would earn a total of  2,635  from holding VF Corporation or generate 66.46% return on investment over 90 days.

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

Patria Investments Limited  vs.  VF Corp.

Patria Investments

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

VF Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, VF sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Patria Investments and VF

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

The idea behind Patria Investments Limited and VF Corporation 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.