Correlation Between Porto Seguro and Fleury SA
Can any of the company-specific risk be diversified away by investing in both Porto Seguro and Fleury SA 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 Porto Seguro and Fleury SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porto Seguro SA and Fleury SA, you can compare the effects of market volatilities on Porto Seguro and Fleury SA 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 Porto Seguro with a short position of Fleury SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porto Seguro and Fleury SA.
Diversification Opportunities for Porto Seguro and Fleury SA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Porto and Fleury is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Porto Seguro SA and Fleury SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury SA and Porto Seguro 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 Porto Seguro SA are associated (or correlated) with Fleury SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleury SA has no effect on the direction of Porto Seguro i.e., Porto Seguro and Fleury SA go up and down completely randomly.
Pair Corralation between Porto Seguro and Fleury SA
Assuming the 90 days trading horizon Porto Seguro SA is expected to generate 0.73 times more return on investment than Fleury SA. However, Porto Seguro SA is 1.36 times less risky than Fleury SA. It trades about 0.14 of its potential returns per unit of risk. Fleury SA is currently generating about 0.02 per unit of risk. If you would invest 3,617 in Porto Seguro SA on December 30, 2024 and sell it today you would earn a total of 471.00 from holding Porto Seguro SA or generate 13.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Porto Seguro SA vs. Fleury SA
Performance |
Timeline |
Porto Seguro SA |
Fleury SA |
Porto Seguro and Fleury SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Porto Seguro and Fleury SA
The main advantage of trading using opposite Porto Seguro and Fleury SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porto Seguro position performs unexpectedly, Fleury SA 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 Fleury SA will offset losses from the drop in Fleury SA's long position.Porto Seguro vs. Engie Brasil Energia | Porto Seguro vs. Lojas Renner SA | Porto Seguro vs. Fleury SA | Porto Seguro vs. M Dias Branco |
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Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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