Correlation Between Vinci Energia and Vinci Logistica

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

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

Diversification Opportunities for Vinci Energia and Vinci Logistica

0.49

Correlation Coefficient

Vinci Energia  Vinci Logistica

Very weak diversification

The 3 months correlation between Vinci and Vinci is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vinci Energia Fundo and Vinci Logistica Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci Logistica Fundo and Vinci Energia 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 Vinci Energia Fundo are associated (or correlated) with Vinci Logistica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci Logistica Fundo has no effect on the direction of Vinci Energia i.e., Vinci Energia and Vinci Logistica go up and down completely randomly.

Pair Corralation between Vinci Energia and Vinci Logistica

Assuming the 90 days trading horizon Vinci Energia Fundo is expected to generate 2.23 times more return on investment than Vinci Logistica. However, Vinci Energia is 2.23 times more volatile than Vinci Logistica Fundo. It trades about 0.11 of its potential returns per unit of risk. Vinci Logistica Fundo is currently generating about 0.05 per unit of risk. If you would invest  3,106  in Vinci Energia Fundo on December 1, 2024 and sell it today you would earn a total of  674.00  from holding Vinci Energia Fundo or generate 21.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Vinci Energia Fundo  vs.  Vinci Logistica Fundo

Vinci Energia Fundo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci Energia Fundo are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Vinci Energia sustained solid returns over the last few months and may actually be approaching a breakup point.

Vinci Logistica Fundo

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Vinci Energia and Vinci Logistica

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

The idea behind Vinci Energia Fundo and Vinci Logistica 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.