Correlation Between FUNDO DE and REAL INVESTOR

Can any of the company-specific risk be diversified away by investing in both FUNDO DE 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 FUNDO DE and REAL INVESTOR 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 REAL INVESTOR FUNDO, you can compare the effects of market volatilities on FUNDO DE 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 FUNDO DE with a short position of REAL INVESTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUNDO DE and REAL INVESTOR.

Diversification Opportunities for FUNDO DE and REAL INVESTOR

0.71

Correlation Coefficient

FUNDO DE  REAL INVESTOR

Poor diversification

The 3 months correlation between FUNDO and REAL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding FUNDO DE INVESTIMENTO 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 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 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 FUNDO DE i.e., FUNDO DE and REAL INVESTOR go up and down completely randomly.

Pair Corralation between FUNDO DE and REAL INVESTOR

Assuming the 90 days trading horizon FUNDO DE INVESTIMENTO is expected to under-perform the REAL INVESTOR. In addition to that, FUNDO DE is 1.77 times more volatile than REAL INVESTOR FUNDO. It trades about -0.04 of its total potential returns per unit of risk. REAL INVESTOR FUNDO is currently generating about 0.18 per unit of volatility. If you would invest  9,470  in REAL INVESTOR FUNDO on December 28, 2024 and sell it today you would earn a total of  737.00  from holding REAL INVESTOR FUNDO or generate 7.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

FUNDO DE INVESTIMENTO  vs.  REAL INVESTOR FUNDO

FUNDO DE INVESTIMENTO

Risk-Adjusted Performance

Very Weak

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

REAL INVESTOR FUNDO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REAL INVESTOR FUNDO are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, REAL INVESTOR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FUNDO DE and REAL INVESTOR

The main advantage of trading using opposite FUNDO DE and REAL INVESTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUNDO DE 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 FUNDO DE INVESTIMENTO 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.