Correlation Between S1YM34 and REAL INVESTOR

Can any of the company-specific risk be diversified away by investing in both S1YM34 and REAL INVESTOR 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 S1YM34 and REAL INVESTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S1YM34 and REAL INVESTOR FUNDO, you can compare the effects of market volatilities on S1YM34 and REAL INVESTOR 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 S1YM34 with a short position of REAL INVESTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of S1YM34 and REAL INVESTOR.

Diversification Opportunities for S1YM34 and REAL INVESTOR

-0.5

Correlation Coefficient

S1YM34  REAL INVESTOR

Very good diversification

The 3 months correlation between S1YM34 and REAL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding S1YM34 and REAL INVESTOR FUNDO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REAL INVESTOR FUNDO and S1YM34 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 S1YM34 are associated (or correlated) with REAL INVESTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REAL INVESTOR FUNDO has no effect on the direction of S1YM34 i.e., S1YM34 and REAL INVESTOR go up and down completely randomly.

Pair Corralation between S1YM34 and REAL INVESTOR

Assuming the 90 days trading horizon S1YM34 is expected to generate 0.08 times more return on investment than REAL INVESTOR. However, S1YM34 is 12.92 times less risky than REAL INVESTOR. It trades about 0.22 of its potential returns per unit of risk. REAL INVESTOR FUNDO is currently generating about -0.25 per unit of risk. If you would invest  17,800  in S1YM34 on September 25, 2024 and sell it today you would earn a total of  93.00  from holding S1YM34 or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

S1YM34  vs.  REAL INVESTOR FUNDO

S1YM34

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in S1YM34 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, S1YM34 sustained solid returns over the last few months and may actually be approaching a breakup point.

REAL INVESTOR FUNDO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REAL INVESTOR FUNDO 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.

Pair Trading with S1YM34 and REAL INVESTOR

The main advantage of trading using opposite S1YM34 and REAL INVESTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S1YM34 position performs unexpectedly, REAL INVESTOR 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 REAL INVESTOR will offset losses from the drop in REAL INVESTOR's long position.

The idea behind S1YM34 and REAL INVESTOR FUNDO 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.