Correlation Between Legatus Shoppings and Faria Lima
Can any of the company-specific risk be diversified away by investing in both Legatus Shoppings and Faria Lima 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 Legatus Shoppings and Faria Lima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legatus Shoppings Fundo and Faria Lima Capital, you can compare the effects of market volatilities on Legatus Shoppings and Faria Lima 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 Legatus Shoppings with a short position of Faria Lima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legatus Shoppings and Faria Lima.
Diversification Opportunities for Legatus Shoppings and Faria Lima
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Legatus and Faria is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Legatus Shoppings Fundo and Faria Lima Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faria Lima Capital and Legatus Shoppings 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 Legatus Shoppings Fundo are associated (or correlated) with Faria Lima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faria Lima Capital has no effect on the direction of Legatus Shoppings i.e., Legatus Shoppings and Faria Lima go up and down completely randomly.
Pair Corralation between Legatus Shoppings and Faria Lima
Assuming the 90 days trading horizon Legatus Shoppings Fundo is expected to generate 1.05 times more return on investment than Faria Lima. However, Legatus Shoppings is 1.05 times more volatile than Faria Lima Capital. It trades about -0.01 of its potential returns per unit of risk. Faria Lima Capital is currently generating about -0.02 per unit of risk. If you would invest 11,017 in Legatus Shoppings Fundo on August 27, 2024 and sell it today you would lose (17.00) from holding Legatus Shoppings Fundo or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legatus Shoppings Fundo vs. Faria Lima Capital
Performance |
| Timeline |
| Legatus Shoppings Fundo |
| Faria Lima Capital |
Legatus Shoppings and Faria Lima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legatus Shoppings and Faria Lima
The main advantage of trading using opposite Legatus Shoppings and Faria Lima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legatus Shoppings position performs unexpectedly, Faria Lima 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 Faria Lima will offset losses from the drop in Faria Lima's long position.| Legatus Shoppings vs. BTG Pactual Logstica | Legatus Shoppings vs. Plano Plano Desenvolvimento | Legatus Shoppings vs. Companhia Habitasul de | Legatus Shoppings vs. The Procter Gamble |
| Faria Lima vs. BTG Pactual Logstica | Faria Lima vs. Plano Plano Desenvolvimento | Faria Lima vs. Companhia Habitasul de | Faria Lima 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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