Correlation Between Fundo Investimento and Fundo Investec

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

Diversification Opportunities for Fundo Investimento and Fundo Investec

0.42

Correlation Coefficient

Fundo Investimento  Fundo Investec

Very weak diversification

The 3 months correlation between Fundo and Fundo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investimento Imobiliario and Fundo Investec IMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Investec IMB 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 Fundo Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Investec IMB has no effect on the direction of Fundo Investimento i.e., Fundo Investimento and Fundo Investec go up and down completely randomly.

Pair Corralation between Fundo Investimento and Fundo Investec

Assuming the 90 days trading horizon Fundo Investimento is expected to generate 3.85 times less return on investment than Fundo Investec. But when comparing it to its historical volatility, Fundo Investimento Imobiliario is 3.45 times less risky than Fundo Investec. It trades about 0.09 of its potential returns per unit of risk. Fundo Investec IMB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,905  in Fundo Investec IMB on December 23, 2024 and sell it today you would earn a total of  835.00  from holding Fundo Investec IMB or generate 17.02% return on investment over 90 days.

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

Fundo Investimento Imobiliario  vs.  Fundo Investec IMB

Fundo Investimento

Risk-Adjusted Performance

OK

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.

Fundo Investec IMB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fundo Investec IMB are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak essential indicators, Fundo Investec sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo Investimento and Fundo Investec

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

The idea behind Fundo Investimento Imobiliario and Fundo Investec IMB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.