Correlation Between Gen Digital and Fundo Investimento

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

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

Diversification Opportunities for Gen Digital and Fundo Investimento

-0.6

Correlation Coefficient

Gen Digital  Fundo Investimento

Excellent diversification

The 3 months correlation between Gen and Fundo is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and Fundo Investimento Imobiliario in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Investimento and Gen Digital 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 Gen Digital are associated (or correlated) with Fundo Investimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Investimento has no effect on the direction of Gen Digital i.e., Gen Digital and Fundo Investimento go up and down completely randomly.

Pair Corralation between Gen Digital and Fundo Investimento

Assuming the 90 days trading horizon Gen Digital is expected to generate 2.28 times more return on investment than Fundo Investimento. However, Gen Digital is 2.28 times more volatile than Fundo Investimento Imobiliario. It trades about 0.15 of its potential returns per unit of risk. Fundo Investimento Imobiliario is currently generating about -0.03 per unit of risk. If you would invest  13,472  in Gen Digital on October 6, 2024 and sell it today you would earn a total of  4,421  from holding Gen Digital or generate 32.82% return on investment over 90 days.

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

Gen Digital  vs.  Fundo Investimento Imobiliario

Gen Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 11 (%) 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.

Fundo Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gen Digital and Fundo Investimento

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

The idea behind Gen Digital and Fundo Investimento Imobiliario 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.