Correlation Between LIFE CAPITAL and Loft II
Can any of the company-specific risk be diversified away by investing in both LIFE CAPITAL and Loft II 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 Loft II 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 Loft II Fundo, you can compare the effects of market volatilities on LIFE CAPITAL and Loft II 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 Loft II. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE CAPITAL and Loft II.
Diversification Opportunities for LIFE CAPITAL and Loft II
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFE and Loft is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding LIFE CAPITAL PARTNERS and Loft II Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loft II Fundo 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 Loft II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loft II Fundo has no effect on the direction of LIFE CAPITAL i.e., LIFE CAPITAL and Loft II go up and down completely randomly.
Pair Corralation between LIFE CAPITAL and Loft II
Assuming the 90 days trading horizon LIFE CAPITAL PARTNERS is expected to generate 0.19 times more return on investment than Loft II. However, LIFE CAPITAL PARTNERS is 5.18 times less risky than Loft II. It trades about -0.02 of its potential returns per unit of risk. Loft II Fundo is currently generating about -0.08 per unit of risk. If you would invest 1,025 in LIFE CAPITAL PARTNERS on August 27, 2024 and sell it today you would lose (81.00) from holding LIFE CAPITAL PARTNERS or give up 7.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFE CAPITAL PARTNERS vs. Loft II Fundo
Performance |
| Timeline |
| LIFE CAPITAL PARTNERS |
| Loft II Fundo |
LIFE CAPITAL and Loft II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFE CAPITAL and Loft II
The main advantage of trading using opposite LIFE CAPITAL and Loft II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE CAPITAL position performs unexpectedly, Loft II 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 Loft II will offset losses from the drop in Loft II'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 |
| Loft II vs. BTG Pactual Logstica | Loft II vs. Plano Plano Desenvolvimento | Loft II vs. Companhia Habitasul de | Loft II 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |