Correlation Between Fras Le and Xp Properties
Can any of the company-specific risk be diversified away by investing in both Fras Le and Xp Properties 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 Fras Le and Xp Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and Xp Properties Fundo, you can compare the effects of market volatilities on Fras Le and Xp Properties 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 Fras Le with a short position of Xp Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Xp Properties.
Diversification Opportunities for Fras Le and Xp Properties
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fras and XPPR11 is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Xp Properties Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Properties Fundo and Fras Le 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 Fras le SA are associated (or correlated) with Xp Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Properties Fundo has no effect on the direction of Fras Le i.e., Fras Le and Xp Properties go up and down completely randomly.
Pair Corralation between Fras Le and Xp Properties
Assuming the 90 days trading horizon Fras le SA is expected to under-perform the Xp Properties. In addition to that, Fras Le is 1.93 times more volatile than Xp Properties Fundo. It trades about -0.18 of its total potential returns per unit of risk. Xp Properties Fundo is currently generating about -0.04 per unit of volatility. If you would invest 1,485 in Xp Properties Fundo on September 4, 2024 and sell it today you would lose (11.00) from holding Xp Properties Fundo or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Fras le SA vs. Xp Properties Fundo
Performance |
| Timeline |
| Fras le SA |
| Xp Properties Fundo |
Fras Le and Xp Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and Xp Properties
The main advantage of trading using opposite Fras Le and Xp Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le position performs unexpectedly, Xp Properties 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 Xp Properties will offset losses from the drop in Xp Properties' long position.The idea behind Fras le SA and Xp Properties 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.| Xp Properties vs. BTG Pactual Logstica | Xp Properties vs. Fundo Investimento Imobiliario | Xp Properties vs. KILIMA VOLKANO RECEBVEIS | Xp Properties vs. DEVANT PROPERTIES FUNDO |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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