Correlation Between Rec Fundo and FDO INV

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

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

Diversification Opportunities for Rec Fundo and FDO INV

0.0

Correlation Coefficient

Rec Fundo  FDO INV

Pay attention - limited upside

The 3 months correlation between Rec and FDO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rec Fundo De and FDO INV CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV CAD and Rec Fundo 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 Rec Fundo De are associated (or correlated) with FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV CAD has no effect on the direction of Rec Fundo i.e., Rec Fundo and FDO INV go up and down completely randomly.

Pair Corralation between Rec Fundo and FDO INV

If you would invest  778.00  in FDO INV CAD on December 2, 2024 and sell it today you would earn a total of  30.00  from holding FDO INV CAD or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	82.26%
Values	Daily Returns

Rec Fundo De  vs.  FDO INV CAD

Rec Fundo De

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rec Fundo De has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental indicators, Rec Fundo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FDO INV CAD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV CAD are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, FDO INV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rec Fundo and FDO INV

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

The idea behind Rec Fundo De and FDO INV CAD 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.