Correlation Between TOTVS SA and Marcopolo

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

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

Diversification Opportunities for TOTVS SA and Marcopolo

0.05

Correlation Coefficient

TOTVS SA  Marcopolo

Significant diversification

The 3 months correlation between TOTVS and Marcopolo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TOTVS SA and Marcopolo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcopolo SA and TOTVS SA 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 TOTVS SA are associated (or correlated) with Marcopolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcopolo SA has no effect on the direction of TOTVS SA i.e., TOTVS SA and Marcopolo go up and down completely randomly.

Pair Corralation between TOTVS SA and Marcopolo

Assuming the 90 days trading horizon TOTVS SA is expected to under-perform the Marcopolo. In addition to that, TOTVS SA is 1.06 times more volatile than Marcopolo SA. It trades about -0.03 of its total potential returns per unit of risk. Marcopolo SA is currently generating about 0.12 per unit of volatility. If you would invest  756.00  in Marcopolo SA on August 31, 2024 and sell it today you would earn a total of  109.00  from holding Marcopolo SA or generate 14.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

TOTVS SA  vs.  Marcopolo SA

TOTVS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOTVS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TOTVS SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Marcopolo SA

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marcopolo SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marcopolo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOTVS SA and Marcopolo

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

The idea behind TOTVS SA and Marcopolo SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..