Correlation Between Fator Verit and Fator IFIX

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

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

Diversification Opportunities for Fator Verit and Fator IFIX

0.72

Correlation Coefficient

Fator Verit  Fator IFIX

Poor diversification

The 3 months correlation between Fator and Fator is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fator Verit Fundo and Fator IFIX Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fator IFIX Fundo and Fator Verit 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 Fator Verit Fundo are associated (or correlated) with Fator IFIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fator IFIX Fundo has no effect on the direction of Fator Verit i.e., Fator Verit and Fator IFIX go up and down completely randomly.

Pair Corralation between Fator Verit and Fator IFIX

Assuming the 90 days trading horizon Fator Verit Fundo is expected to generate 0.82 times more return on investment than Fator IFIX. However, Fator Verit Fundo is 1.22 times less risky than Fator IFIX. It trades about 0.0 of its potential returns per unit of risk. Fator IFIX Fundo is currently generating about -0.04 per unit of risk. If you would invest  7,923  in Fator Verit Fundo on October 7, 2024 and sell it today you would lose (43.00) from holding Fator Verit Fundo or give up 0.54% of portfolio value over 90 days.

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

Fator Verit Fundo  vs.  Fator IFIX Fundo

Fator Verit Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fator IFIX Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fator Verit and Fator IFIX

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

The idea behind Fator Verit Fundo and Fator IFIX 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.