Correlation Between LIFE CAPITAL and Mxima Renda
Can any of the company-specific risk be diversified away by investing in both LIFE CAPITAL and Mxima Renda 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 LIFE CAPITAL and Mxima Renda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE CAPITAL PARTNERS and Mxima Renda Corporativa, you can compare the effects of market volatilities on LIFE CAPITAL and Mxima Renda 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 LIFE CAPITAL with a short position of Mxima Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE CAPITAL and Mxima Renda.
Diversification Opportunities for LIFE CAPITAL and Mxima Renda
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LIFE and Mxima is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding LIFE CAPITAL PARTNERS and Mxima Renda Corporativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mxima Renda Corporativa and LIFE CAPITAL 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 LIFE CAPITAL PARTNERS are associated (or correlated) with Mxima Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mxima Renda Corporativa has no effect on the direction of LIFE CAPITAL i.e., LIFE CAPITAL and Mxima Renda go up and down completely randomly.
Pair Corralation between LIFE CAPITAL and Mxima Renda
Assuming the 90 days trading horizon LIFE CAPITAL PARTNERS is expected to generate 0.56 times more return on investment than Mxima Renda. However, LIFE CAPITAL PARTNERS is 1.77 times less risky than Mxima Renda. It trades about -0.14 of its potential returns per unit of risk. Mxima Renda Corporativa is currently generating about -0.13 per unit of risk. If you would invest 1,033 in LIFE CAPITAL PARTNERS on August 28, 2024 and sell it today you would lose (101.00) from holding LIFE CAPITAL PARTNERS or give up 9.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFE CAPITAL PARTNERS vs. Mxima Renda Corporativa
Performance |
| Timeline |
| LIFE CAPITAL PARTNERS |
| Mxima Renda Corporativa |
LIFE CAPITAL and Mxima Renda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFE CAPITAL and Mxima Renda
The main advantage of trading using opposite LIFE CAPITAL and Mxima Renda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE CAPITAL position performs unexpectedly, Mxima Renda 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 Mxima Renda will offset losses from the drop in Mxima Renda's long position.| LIFE CAPITAL vs. BTG Pactual Logstica | LIFE CAPITAL vs. Plano Plano Desenvolvimento | LIFE CAPITAL vs. Companhia Habitasul de | LIFE CAPITAL vs. The Procter Gamble |
| Mxima Renda vs. Energisa SA | Mxima Renda vs. BTG Pactual Logstica | Mxima Renda vs. Plano Plano Desenvolvimento | Mxima Renda 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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