Correlation Between Fundo De and Mangels Industrial

Can any of the company-specific risk be diversified away by investing in both Fundo De and Mangels Industrial 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 Fundo De and Mangels Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fundo De Investimento and Mangels Industrial SA, you can compare the effects of market volatilities on Fundo De and Mangels Industrial 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 Fundo De with a short position of Mangels Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and Mangels Industrial.

Diversification Opportunities for Fundo De and Mangels Industrial

0.74

Correlation Coefficient

Fundo De  Mangels Industrial

Poor diversification

The 3 months correlation between Fundo and Mangels is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fundo De Investimento and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial and Fundo De 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 Fundo De Investimento are associated (or correlated) with Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of Fundo De i.e., Fundo De and Mangels Industrial go up and down completely randomly.

Pair Corralation between Fundo De and Mangels Industrial

Assuming the 90 days trading horizon Fundo De Investimento is expected to under-perform the Mangels Industrial. But the etf apears to be less risky and, when comparing its historical volatility, Fundo De Investimento is 6.62 times less risky than Mangels Industrial. The etf trades about -0.16 of its potential returns per unit of risk. The Mangels Industrial SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Mangels Industrial SA on February 2, 2024 and sell it today you would earn a total of  145.00  from holding Mangels Industrial SA or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fundo De Investimento  vs.  Mangels Industrial SA

Fundo De Investimento

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fundo De Investimento are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fundo De is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mangels Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mangels Industrial SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mangels Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo De and Mangels Industrial

The main advantage of trading using opposite Fundo De and Mangels Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundo De position performs unexpectedly, Mangels Industrial 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 Mangels Industrial will offset losses from the drop in Mangels Industrial's long position.

The idea behind Fundo De Investimento and Mangels Industrial SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.