Correlation Between Fundo Investimento and SPARTA FIAGRO

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

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

Diversification Opportunities for Fundo Investimento and SPARTA FIAGRO

0.13

Correlation Coefficient

Fundo Investimento  SPARTA FIAGRO

Average diversification

The 3 months correlation between Fundo and SPARTA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investimento Imobiliario and SPARTA FIAGRO FDO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTA FIAGRO FDO and Fundo Investimento 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 Fundo Investimento Imobiliario are associated (or correlated) with SPARTA FIAGRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTA FIAGRO FDO has no effect on the direction of Fundo Investimento i.e., Fundo Investimento and SPARTA FIAGRO go up and down completely randomly.

Pair Corralation between Fundo Investimento and SPARTA FIAGRO

Assuming the 90 days trading horizon Fundo Investimento Imobiliario is expected to under-perform the SPARTA FIAGRO. But the fund apears to be less risky and, when comparing its historical volatility, Fundo Investimento Imobiliario is 1.77 times less risky than SPARTA FIAGRO. The fund trades about -0.11 of its potential returns per unit of risk. The SPARTA FIAGRO FDO is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  8,407  in SPARTA FIAGRO FDO on December 5, 2024 and sell it today you would earn a total of  561.00  from holding SPARTA FIAGRO FDO or generate 6.67% return on investment over 90 days.

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

Fundo Investimento Imobiliario  vs.  SPARTA FIAGRO FDO

Fundo Investimento

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fundo Investimento Imobiliario are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong essential indicators, Fundo Investimento is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPARTA FIAGRO FDO

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTA FIAGRO FDO are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, SPARTA FIAGRO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fundo Investimento and SPARTA FIAGRO

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

The idea behind Fundo Investimento Imobiliario and SPARTA FIAGRO FDO 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.