Correlation Between BICE11 and Hedge Realty
Can any of the company-specific risk be diversified away by investing in both BICE11 and Hedge Realty 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 BICE11 and Hedge Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BICE11 and Hedge Realty Development, you can compare the effects of market volatilities on BICE11 and Hedge Realty 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 BICE11 with a short position of Hedge Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BICE11 and Hedge Realty.
Diversification Opportunities for BICE11 and Hedge Realty
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BICE11 and Hedge is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BICE11 and Hedge Realty Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hedge Realty Development and BICE11 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 BICE11 are associated (or correlated) with Hedge Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hedge Realty Development has no effect on the direction of BICE11 i.e., BICE11 and Hedge Realty go up and down completely randomly.
Pair Corralation between BICE11 and Hedge Realty
Assuming the 90 days trading horizon BICE11 is expected to generate 0.6 times more return on investment than Hedge Realty. However, BICE11 is 1.67 times less risky than Hedge Realty. It trades about -0.08 of its potential returns per unit of risk. Hedge Realty Development is currently generating about -0.09 per unit of risk. If you would invest 94,078 in BICE11 on September 12, 2024 and sell it today you would lose (3,978) from holding BICE11 or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BICE11 vs. Hedge Realty Development
Performance |
| Timeline |
| BICE11 |
| Hedge Realty Development |
BICE11 and Hedge Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BICE11 and Hedge Realty
The main advantage of trading using opposite BICE11 and Hedge Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BICE11 position performs unexpectedly, Hedge Realty 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 Hedge Realty will offset losses from the drop in Hedge Realty's long position.| BICE11 vs. BTG Pactual Logstica | BICE11 vs. Plano Plano Desenvolvimento | BICE11 vs. Companhia Habitasul de | BICE11 vs. FDO INV IMOB |
| Hedge Realty vs. ASA METROPOLIS FUNDO | Hedge Realty vs. Rbr Desenvolvimento Comercial | Hedge Realty vs. BICE11 | Hedge Realty vs. HEDGE DESENVOLVIMENTO LOGSTICO |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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