Correlation Between Fundo De and Fras Le
Can any of the company-specific risk be diversified away by investing in both Fundo De and Fras Le 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 De and Fras Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundo de Investimento and Fras le SA, you can compare the effects of market volatilities on Fundo De and Fras Le 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 De with a short position of Fras Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and Fras Le.
Diversification Opportunities for Fundo De and Fras Le
Excellent diversification
The 3 months correlation between Fundo and Fras is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA and Fundo De 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 de Investimento are associated (or correlated) with Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Fundo De i.e., Fundo De and Fras Le go up and down completely randomly.
Pair Corralation between Fundo De and Fras Le
Assuming the 90 days trading horizon Fundo de Investimento is expected to under-perform the Fras Le. But the fund apears to be less risky and, when comparing its historical volatility, Fundo de Investimento is 2.5 times less risky than Fras Le. The fund trades about -0.18 of its potential returns per unit of risk. The Fras le SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,730 in Fras le SA on August 28, 2024 and sell it today you would earn a total of 378.00 from holding Fras le SA or generate 21.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundo de Investimento vs. Fras le SA
Performance |
| Timeline |
| Fundo de Investimento |
| Fras le SA |
Fundo De and Fras Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundo De and Fras Le
The main advantage of trading using opposite Fundo De and Fras Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundo De position performs unexpectedly, Fras Le 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 Fras Le will offset losses from the drop in Fras Le's long position.| Fundo De vs. BTG Pactual Logstica | Fundo De vs. Plano Plano Desenvolvimento | Fundo De vs. Companhia Habitasul de | Fundo De vs. The Procter Gamble |
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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