Correlation Between Fundo Investimento and Dollar General

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

Diversification Opportunities for Fundo Investimento and Dollar General

-0.41

Correlation Coefficient

Fundo Investimento  Dollar General

Very good diversification

The 3 months correlation between Fundo and Dollar is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investimento Imobiliario and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Fundo Investimento i.e., Fundo Investimento and Dollar General go up and down completely randomly.

Pair Corralation between Fundo Investimento and Dollar General

Assuming the 90 days trading horizon Fundo Investimento Imobiliario is expected to under-perform the Dollar General. But the fund apears to be less risky and, when comparing its historical volatility, Fundo Investimento Imobiliario is 1.34 times less risky than Dollar General. The fund trades about -0.03 of its potential returns per unit of risk. The Dollar General is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,933  in Dollar General on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Dollar General or generate 0.0% return on investment over 90 days.

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

Fundo Investimento Imobiliario  vs.  Dollar General

Fundo Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dollar General

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dollar General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Dollar General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fundo Investimento and Dollar General

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

The idea behind Fundo Investimento Imobiliario and Dollar General 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.