Correlation Between TRX Renda and Xp Properties

Can any of the company-specific risk be diversified away by investing in both TRX Renda and Xp Properties 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 Xp Properties 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 Xp Properties Fundo, you can compare the effects of market volatilities on TRX Renda and Xp Properties 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 Xp Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRX Renda and Xp Properties.

Diversification Opportunities for TRX Renda and Xp Properties

0.67

Correlation Coefficient

TRX Renda  Xp Properties

Poor diversification

The 3 months correlation between TRX and XPPR11 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TRX Renda Fundo and Xp Properties Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Properties Fundo 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 Xp Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Properties Fundo has no effect on the direction of TRX Renda i.e., TRX Renda and Xp Properties go up and down completely randomly.

Pair Corralation between TRX Renda and Xp Properties

Assuming the 90 days trading horizon TRX Renda Fundo is expected to generate 0.91 times more return on investment than Xp Properties. However, TRX Renda Fundo is 1.09 times less risky than Xp Properties. It trades about -0.06 of its potential returns per unit of risk. Xp Properties Fundo is currently generating about -0.32 per unit of risk. If you would invest  10,221  in TRX Renda Fundo on September 18, 2024 and sell it today you would lose (423.00) from holding TRX Renda Fundo or give up 4.14% of portfolio value over 90 days.

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

TRX Renda Fundo  vs.  Xp Properties Fundo

TRX Renda Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRX Renda Fundo has generated negative risk-adjusted returns adding no value to fund investors. 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.

Xp Properties Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Properties Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with TRX Renda and Xp Properties

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

The idea behind TRX Renda Fundo and Xp Properties 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.