Correlation Between FDO INV and Real Estate
Can any of the company-specific risk be diversified away by investing in both FDO INV and Real Estate 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 FDO INV and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FDO INV IMOB and Real Estate Investment, you can compare the effects of market volatilities on FDO INV and Real Estate 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 FDO INV with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDO INV and Real Estate.
Diversification Opportunities for FDO INV and Real Estate
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FDO and Real is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV IMOB and Real Estate Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Investment and FDO INV 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 FDO INV IMOB are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Investment has no effect on the direction of FDO INV i.e., FDO INV and Real Estate go up and down completely randomly.
Pair Corralation between FDO INV and Real Estate
Assuming the 90 days trading horizon FDO INV IMOB is expected to generate 72.72 times more return on investment than Real Estate. However, FDO INV is 72.72 times more volatile than Real Estate Investment. It trades about 0.07 of its potential returns per unit of risk. Real Estate Investment is currently generating about 0.03 per unit of risk. If you would invest 20.00 in FDO INV IMOB on September 14, 2024 and sell it today you would earn a total of 144,980 from holding FDO INV IMOB or generate 724900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.59% |
| Values | Daily Returns |
FDO INV IMOB vs. Real Estate Investment
Performance |
| Timeline |
| FDO INV IMOB |
| Real Estate Investment |
FDO INV and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FDO INV and Real Estate
The main advantage of trading using opposite FDO INV and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FDO INV position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.The idea behind FDO INV IMOB and Real Estate Investment 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.| Real Estate vs. Energisa SA | Real Estate vs. BTG Pactual Logstica | Real Estate vs. Plano Plano Desenvolvimento | Real Estate vs. Companhia Habitasul de |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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