Correlation Between TRX Renda and HEDGE OFFICE

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

By analyzing existing cross correlation between TRX Renda Fundo and HEDGE OFFICE INCOME, you can compare the effects of market volatilities on TRX Renda and HEDGE OFFICE 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 TRX Renda with a short position of HEDGE OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRX Renda and HEDGE OFFICE.

Diversification Opportunities for TRX Renda and HEDGE OFFICE

0.38

Correlation Coefficient

TRX Renda  HEDGE OFFICE

Weak diversification

The 3 months correlation between TRX and HEDGE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding TRX Renda Fundo and HEDGE OFFICE INCOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEDGE OFFICE INCOME and TRX Renda 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 TRX Renda Fundo are associated (or correlated) with HEDGE OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEDGE OFFICE INCOME has no effect on the direction of TRX Renda i.e., TRX Renda and HEDGE OFFICE go up and down completely randomly.

Pair Corralation between TRX Renda and HEDGE OFFICE

Assuming the 90 days trading horizon TRX Renda Fundo is expected to generate 0.53 times more return on investment than HEDGE OFFICE. However, TRX Renda Fundo is 1.89 times less risky than HEDGE OFFICE. It trades about -0.02 of its potential returns per unit of risk. HEDGE OFFICE INCOME is currently generating about -0.09 per unit of risk. If you would invest  9,930  in TRX Renda Fundo on October 25, 2024 and sell it today you would lose (57.00) from holding TRX Renda Fundo or give up 0.57% of portfolio value over 90 days.

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

TRX Renda Fundo  vs.  HEDGE OFFICE INCOME

TRX Renda Fundo

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRX Renda Fundo are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, TRX Renda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HEDGE OFFICE INCOME

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TRX Renda and HEDGE OFFICE

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

The idea behind TRX Renda Fundo and HEDGE OFFICE INCOME 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.