Correlation Between XP Selection and Loft II
Can any of the company-specific risk be diversified away by investing in both XP Selection 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 XP Selection and Loft II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XP Selection Fundo and Loft II Fundo, you can compare the effects of market volatilities on XP Selection 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 XP Selection with a short position of Loft II. Check out your portfolio center. Please also check ongoing floating volatility patterns of XP Selection and Loft II.
Diversification Opportunities for XP Selection and Loft II
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between XPSF11 and Loft is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding XP Selection Fundo 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 XP Selection 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 XP Selection Fundo 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 XP Selection i.e., XP Selection and Loft II go up and down completely randomly.
Pair Corralation between XP Selection and Loft II
Assuming the 90 days trading horizon XP Selection Fundo is expected to generate 0.14 times more return on investment than Loft II. However, XP Selection Fundo is 6.99 times less risky than Loft II. It trades about -0.13 of its potential returns per unit of risk. Loft II Fundo is currently generating about -0.1 per unit of risk. If you would invest 771.00 in XP Selection Fundo on August 26, 2024 and sell it today you would lose (102.00) from holding XP Selection Fundo or give up 13.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
XP Selection Fundo vs. Loft II Fundo
Performance |
| Timeline |
| XP Selection Fundo |
| Loft II Fundo |
XP Selection and Loft II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XP Selection and Loft II
The main advantage of trading using opposite XP Selection and Loft II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XP Selection 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.| XP Selection vs. Domo Fundo de | XP Selection vs. Aesapar Fundo de | XP Selection vs. FUNDO DE INVESTIMENTO | XP Selection vs. Imob I Fundo |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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