Correlation Between Valora Re and Valora Hedge
Can any of the company-specific risk be diversified away by investing in both Valora Re and Valora Hedge 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 Valora Re and Valora Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valora Re III and Valora Hedge, you can compare the effects of market volatilities on Valora Re and Valora Hedge 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 Valora Re with a short position of Valora Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valora Re and Valora Hedge.
Diversification Opportunities for Valora Re and Valora Hedge
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valora and Valora is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Valora Re III and Valora Hedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valora Hedge and Valora Re 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 Valora Re III are associated (or correlated) with Valora Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valora Hedge has no effect on the direction of Valora Re i.e., Valora Re and Valora Hedge go up and down completely randomly.
Pair Corralation between Valora Re and Valora Hedge
Assuming the 90 days trading horizon Valora Re III is expected to under-perform the Valora Hedge. In addition to that, Valora Re is 1.33 times more volatile than Valora Hedge. It trades about -0.29 of its total potential returns per unit of risk. Valora Hedge is currently generating about 0.12 per unit of volatility. If you would invest 775.00 in Valora Hedge on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Valora Hedge or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valora Re III vs. Valora Hedge
Performance |
| Timeline |
| Valora Re III |
| Valora Hedge |
Valora Re and Valora Hedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valora Re and Valora Hedge
The main advantage of trading using opposite Valora Re and Valora Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valora Re position performs unexpectedly, Valora Hedge 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 Valora Hedge will offset losses from the drop in Valora Hedge's long position.| Valora Re vs. Valora Hedge | Valora Re vs. Valora Cri Indice | Valora Re vs. Real Estate Investment | Valora Re vs. NAVI CRDITO IMOBILIRIO |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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