Correlation Between Fundo De and Fundo Investec

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

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

Diversification Opportunities for Fundo De and Fundo Investec

0.8

Correlation Coefficient

Fundo De  Fundo Investec

Very poor diversification

The 3 months correlation between Fundo and Fundo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fundo De Investimento and Fundo Investec IMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Investec IMB and Fundo De 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 Fundo De Investimento are associated (or correlated) with Fundo Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Investec IMB has no effect on the direction of Fundo De i.e., Fundo De and Fundo Investec go up and down completely randomly.

Pair Corralation between Fundo De and Fundo Investec

Assuming the 90 days trading horizon Fundo De Investimento is expected to under-perform the Fundo Investec. But the fund apears to be less risky and, when comparing its historical volatility, Fundo De Investimento is 1.06 times less risky than Fundo Investec. The fund trades about -0.15 of its potential returns per unit of risk. The Fundo Investec IMB is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  5,320  in Fundo Investec IMB on September 24, 2024 and sell it today you would lose (320.00) from holding Fundo Investec IMB or give up 6.02% of portfolio value over 90 days.

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

Fundo De Investimento  vs.  Fundo Investec IMB

Fundo De Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo De Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fundo Investec IMB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Investec IMB has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's essential 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 Fundo De and Fundo Investec

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

The idea behind Fundo De Investimento and Fundo Investec IMB 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.