Correlation Between Fundo Investimento and NAVI CRDITO

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

Diversification Opportunities for Fundo Investimento and NAVI CRDITO

0.74

Correlation Coefficient

Fundo Investimento  NAVI CRDITO

Poor diversification

The 3 months correlation between Fundo and NAVI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investimento Imobiliario and NAVI CRDITO IMOBILIRIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAVI CRDITO IMOBILIRIO 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 NAVI CRDITO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAVI CRDITO IMOBILIRIO has no effect on the direction of Fundo Investimento i.e., Fundo Investimento and NAVI CRDITO go up and down completely randomly.

Pair Corralation between Fundo Investimento and NAVI CRDITO

Assuming the 90 days trading horizon Fundo Investimento Imobiliario is expected to generate 0.5 times more return on investment than NAVI CRDITO. However, Fundo Investimento Imobiliario is 2.01 times less risky than NAVI CRDITO. It trades about 0.38 of its potential returns per unit of risk. NAVI CRDITO IMOBILIRIO is currently generating about 0.09 per unit of risk. If you would invest  7,862  in Fundo Investimento Imobiliario on October 6, 2024 and sell it today you would earn a total of  669.00  from holding Fundo Investimento Imobiliario or generate 8.51% return on investment over 90 days.

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

Fundo Investimento Imobiliario  vs.  NAVI CRDITO IMOBILIRIO

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.

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAVI CRDITO IMOBILIRIO has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fundo Investimento and NAVI CRDITO

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

The idea behind Fundo Investimento Imobiliario and NAVI CRDITO IMOBILIRIO 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.