Correlation Between XP Corporate and Vinci Corporate

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

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

Diversification Opportunities for XP Corporate and Vinci Corporate

0.47

Correlation Coefficient

XP Corporate  Vinci Corporate

Very weak diversification

The 3 months correlation between XPCM11 and Vinci is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding XP Corporate Maca and Vinci Corporate Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci Corporate Fundo and XP Corporate 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 XP Corporate Maca are associated (or correlated) with Vinci Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci Corporate Fundo has no effect on the direction of XP Corporate i.e., XP Corporate and Vinci Corporate go up and down completely randomly.

Pair Corralation between XP Corporate and Vinci Corporate

Assuming the 90 days trading horizon XP Corporate Maca is expected to under-perform the Vinci Corporate. But the fund apears to be less risky and, when comparing its historical volatility, XP Corporate Maca is 1.64 times less risky than Vinci Corporate. The fund trades about -0.11 of its potential returns per unit of risk. The Vinci Corporate Fundo is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  734.00  in Vinci Corporate Fundo on October 26, 2024 and sell it today you would lose (260.00) from holding Vinci Corporate Fundo or give up 35.42% of portfolio value over 90 days.

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

XP Corporate Maca  vs.  Vinci Corporate Fundo

XP Corporate Maca

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vinci Corporate Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with XP Corporate and Vinci Corporate

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

The idea behind XP Corporate Maca and Vinci Corporate 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.