Correlation Between Fundo De and Gen Digital

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

Diversification Opportunities for Fundo De and Gen Digital

-0.55

Correlation Coefficient

Fundo De  Gen Digital

Excellent diversification

The 3 months correlation between Fundo and Gen is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Fundo De i.e., Fundo De and Gen Digital go up and down completely randomly.

Pair Corralation between Fundo De and Gen Digital

Assuming the 90 days trading horizon Fundo de Investimento is expected to under-perform the Gen Digital. But the fund apears to be less risky and, when comparing its historical volatility, Fundo de Investimento is 1.31 times less risky than Gen Digital. The fund trades about -0.05 of its potential returns per unit of risk. The Gen Digital is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  13,472  in Gen Digital on October 25, 2024 and sell it today you would earn a total of  3,528  from holding Gen Digital or generate 26.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fundo de Investimento  vs.  Gen Digital

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 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.

Gen Digital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gen Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo De and Gen Digital

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

The idea behind Fundo de Investimento and Gen Digital 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..